6 Smart Money Ideas: Consider These David Einhorn Stocks Today

by: Investment Underground

David Einhorn of Greenlight Capital is one of the most respected hedge fund investors today. Below are 6 companies he currently owns, plus some commentary on each.

Broadridge Financial Solutions (NYSE:BR): BR provides investor communication, securities processing and clearing and outsourcing solutions to the financial services industry. The company has a $2.8 billion dollar market cap, strong cash flows, a 2.7% dividend yield and a near monopoly in the proxy voting business. According to data provided by GuruFocus, Einhorn added positions in the $21 range, a good indicator that there is still value in BR at $21.55 per share, the price at the time of writing.

Potash Corporation of Saskatchewan (NYSE:POT): The eponymous producer of the fertilizer input, PotashCorp, maintains its number one position globally in the potash game. If you listen to the analysts over at UBS, which as with all analysts we would caution you to do with prudence, PotashCorp might well be gold. Despite a massive run up in the price of the stock, UBS reiterated a buy rating for the stock at the end of January.

Microsoft (NASDAQ:MSFT): Another stock in Einhorn’s portfolio, MSFT made $66.69 billion in revenues and $20.56 billion in profits in the year through December 2010. These were respective increases of 13.6% and 26.5%, from the same period in 2009. The profit and EBT margins were 79.16% and 40.6%. At the end of FY 2010 in June, the profit and EBT margins were 80.16% and 40%, respectively. ROIC was 37.94%, and 38.5% in FY 2010. The current ratio is 2.45 with a D/E of 0.20. Because EPS was $2.35 through December 2010, shares trade under a P/E of 11.3.

The low EPS estimate is $0.49, and the high EPS estimate is $0.61 for Q3 2011. The Company’s actual EPS was $0.45 in Q3 2010. A middle-of-the-ground EPS is $0.55, so the implied range is $2.39-$2.45-$2.51 for EPS through the end of 2010. For the same period in 2009, EPS was $1.93. The 30 day put/call ratio is 0.6.

Microsoft announced it has now sold over 300 million Windows 7 licenses, and Windows 7 is now running on over 20% of Internet-connected PCs. Windows Phone 7 also launched during Q2 in 30 countries and on 60 operators and 9 different devices. Microsoft announced developers are adding Windows Phone 7 applications to the marketplace at a rate of over 100 per day. See our recent article on 11 tech bellwethers, including Microsoft, here.

Pfizer (NYSE:PFE): Pfizer continues to engage with some of the most promising biotech companies out there. Just recently Pfizer inked a deal with Seattle Genetics (NASDAQ:SGEN), which seems ready to heat up. While we wait, it will continue to provide investors with a reassuring dividend income. For 7 high yield pharma stocks to consider for the golden years, click here.

Apple (NASDAQ:AAPL): The company put up a ROIC of 36.8%, for the trailing 12 months ending in December 25, 2010, and also produced $76.28 billion in revenues. Profit and EBIT margins were 38.76% and 28.5%. ROE was 36.8%. Ending in September, profit margins in 2010, 2009, 2008, 2007, and 2006 were, 39.38%, 40.14%, 34.3%, 33.97%, and 28.98%.

The respective EBIT margins were 28.4%, 28.1%, 21.2%, 20.86%, and 14.59%. The current ratio is 1.85 with a D/E near zero. Apple shares trade under a P/E multiple of 19.1, given that the most recent annualized EPS is $17.93. EPS also grew 75.2% over the past 12 months. The 30 day put/call ratio is 0.7. Given the put/call ratio of below 1, most investors believe that AAPL is undervalued. The computer hardware sub-industry has an average profit margin of 7.57%, ROE of 30.1%, D/E of 0.42, and P/E of 16.5. To learn how much we think Apple is worth per share, see our recent article.

Becton, Dickinson & Company (NYSE:BDX): Another healthcare giant, Becton has carved out significant market share in the medical tool market. Becton has a long history of raising its dividend. Becton doesn't have a sea of patent protected drugs to shield it from competition and many of its products have been commoditized, creating a narrow moat for the company. We think this is also a stock that Buffett might like.

For our recent article on 14 stocks George Soros loves, see here.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.