A Look Into Some Of Carl Icahn's Top Stock Picks
Activist Investor Carl Icahn rattled the cage again last week at eBay (NASDAQ: EBAY), one of his top stock picks at the moment, along with Apple (NASDAQ: AAPL), Herbalife (NYSE: HLF) and Netflix (NASDAQ: NFLX).
In his latest letter to eBay shareholders, Icahn said he had "not yet begun to fight" and again pushed for the company to spin off its PayPal unit, as well as replace certain board members. eBay denies that shareholders support such moves, despite results of a new survey that suggest otherwise.
Below is a quick look at how these four stocks have fared, and what analysts in general expect from them. Some other Icahn picks include Hologic, Navistar International, Nuance Communications, Talisman Energy, and of course his own Icahn Enterprises.
Until recently, Icahn had been pushing for increased stock buybacks from Apple. And he suggested shares would return to $700. The company now sports a market capitalization of around $473 billion, with a dividend yield near 2.6 percent. Its long-term earnings per share (EPS) growth forecast is more than 19 percent.
Of the 52 analysts surveyed by Thomson First Call, 14 rate the stock at Strong Buy and 21 more also recommend buying shares. The mean price target, or where analysts expect the share price to go, is more than nine percent higher than the current share price. The street-high price target is $777.
Shares are down about four percent year to date, but almost 23 percent higher than a year ago. The share price currently is less than the 50-day moving average. Over the past six months, the stock has underperformed the likes of Google and Hewlett-Packard, and the broader markets as well.
Icahn feels PayPal cannot reach its full potential until it is free from eBay, so competing retailers like Amazon and Walmart can accept PayPal. eBay's market cap is more than $76 billion, but it offers no dividend. The long-term EPS growth forecast is more than 14 percent. Its P/E ratio is less than those of Amazon or Google.
For at least three months, the consensus recommendation of analysts has been to buy eBay shares. They see some room for shares to run, as their mean price target is more than six percent higher than the current share price. That consensus target would be a new multiyear high for eBay.
The share price is more than nine percent higher year to date, and well above the 50-day and 200-day moving averages, which formed a golden cross in February. The stock has underperformed Amazon and the Nasdaq over the past six months, but it has outperformed Overstock.com.
Icahn has had a very public feud with Bill Ackman of Pershing Square Capital Management over this stock. Ackman has called the company a pyramid scheme. The nutrition company has a market cap of more than $6 billion. Its dividend yield is near 1.8 percent, and the return on equity is about 127 percent.
All five of the polled analysts recommend buying shares, with three of them rating the stock at Strong Buy. A move to the analysts' mean price target would represent a more than 27 percent gain for shareholders. At least one analyst sees around 31 percent upside over the next 12 months.
Shares have traded mostly between $65 and $70 since the beginning of February. They are down almost 19 percent year to date, but still north of the 200-day moving average. Over the past six months, the stock has outperformed competitor GNC Holdings but underperformed the broader markets.
This is one of Icahn's biggest wins. He bought in around $100 a share in 2012, sold half his stake at $350 per share, and shares now trade near $450. The streaming video provider has a market cap of less than $27 billion, but it offers no dividend. The long-term EPS growth forecast is more than 35 percent.
Only 10 of the 38 analysts surveyed recommend buying shares. The share price has overrun their mean price target, indicating the analysts in general see no upside potential at this time. The street-high price target is more than 14 percent higher than the share price, though.
The stock hit a new 52-week high last week, and the share price is about 23 percent higher than at the beginning of the year, as well as up more than 142 percent from a year ago. The stock has outperformed competitors Amazon and Outerwall, operator of the Redbox DVD kiosks, over the past six months.
At the time of this writing, the author had no position in the mentioned equities.
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