We took a look at what George Soros is selling. This is what we found:
Monsanto (MON): Soros reduced his stake by nearly 50% to 3.2 million shares in the latest full quarter. Monsanto, with a market cap of $36.41B, is one of the largest agricultural product companies in the world. The firm offers chemicals and genetically-modified seeds to boost farm production across a wide variety of crops. Although the stock is currently trading at a somewhat expensive P/E ratio of 32.95, the company has top-notch profitability, with an operating margin of 16.01%. The company also has a ROE of 11.28%, and offers a $1.12 (1.70%) dividend.
In addition to rising food prices, there are a few factors that appear to be in Monsanto’s favor. First of all, Monsanto has a global presence, and should benefit from increased food demand in emerging markets, especially Latin America, where Monsanto has already experienced significant growth. Second, low investment in agriculture over the last decade means that products like Monsanto’s will become more important to improve farm productivity. Finally, Monsanto has always been at the forefront of agricultural breakthroughs, and currently has nine products in the developmental pipeline.
Weatherford (WFT): Soros reduced his stake by 76% to 1.7 million shares in the latest full quarter. This oil servicer provides the equipment and services used in the drilling and production of oil and natural gas wells for the independents and oil majors. Lately, the company's stock has been on a tear; however, shares still trade below analysts' estimates. WFT has a median price target of $26 by 23 brokers and a high target of $45. The latest coverage came on Mar. 8, when Dahlman Rose initiated a Buy rating. We think shares are trading right around their fair value estimate.
CenturyLink (CTL): Soros reduced his stake by 81% to 286,000 shares in the latest full quarter. CTL last paid a dividend of $0.725 per share on February 25. The current yield is 7%. Also, the company has paid dividends since 1991. Operating revenues increased by 69% to $5.3 billion in the first nine months of 2009, but EPS fell by 4.4% from $2.50 to $2.39. Shares are now trading over $46. The company provides telecommunications services, including local and long distance voice, wholesale local network access, high-speed Internet access, other data services and video services. It is also a Fortune 500 company.
Verizon (VZ): Soros reduced his stake by 47% to 1.04 million shares in the latest full quarter. Verizon pays a hefty 5.10% dividend yield. This market leader (the company serves around 94 million subscribers, or approximately 25% of the U.S. population) already has an extremely loyal consumer base, and with Apple (AAPL) iPhone pre-orders going gangbusters thus far, we think those relationships will only grow stronger. We think this once-sleepy telecom has potential to enter a new growth phase as it grabs market share from competitors with its adoption of the iPhone handset.
The company should be able to handle the new services demanded by customers and, on a relative basis, outperform its peers. Average revenue per customer should get a shot in the arm over the next few years as Verizon rolls out higher-revenue bundled plans and increases smart phone penetration. The company is worth $36 per share, discounted at a 10% rate. It's also worth a look for its dividend yield. Though the AT&T (T) deal does throw a curve ball at Verizon’s plans, should the deal be approved, we think it’s very likely VZ will make strategic acquisitions to maintain market share in the face of new competition.
Pfizer (PFE): Soros reduced his stake by 64% to 850,000 shares in the latest full quarter. This is a smart-money idea that David Einhorn also loves. It trades with a P/E multiple of 19.1, P/B multiple of 1.8, and P/S multiple of 2.3. The respective industry averages are 13, 2.7, and 2.5. From 2004 to 2007, the respective P/S multiples were 3.9, 3.4, 3.9, and 3.3.
In 2010, EPS was $1.02, which was a decrease of 17.07%, after growing by 2.5% in 2009. For 2011, the company expects EPS to be between $1.09 and $1.24. Moreover, for 2012, the company is aiming toward an EPS between $1.58 and $1.73.
Amazon, Inc. (AMZN): Soros reduced his stake by nearly 80% to 31,000 shares in the latest full quarter. AMZN is an online retailer that operates both in North America and internationally. AMZN also offers programs that enable sellers to sell their products on its websites and their own branded websites. While AMZN has come to dominate the online retail industry over the past few years, it's starting to face increased competition from brick-and-mortar retailers struggling to maintain Internet sales revenue from the increasingly lucrative online shopper.
AMZN’s operating margin of 3.66% is already among the lowest in the industry, and given AMZN’s inability to provide the kinds of in-store services alternatives for customers that brick-and-mortar stores offer, AMZN could be poised to decline even further in 2011. AMZN is currently trading around a 65 P/E multiple.
AT&T: Soros reduced his stake by 37% to 1.1 million shares in the latest full quarter. AT&T has a brand value of $28.88 billion, the 10th most valuable brand name. In 2010, this company drew in $124.28 billion in revenues, which was +1.03%, after -0.81% in 2009. Moreover, the EBT margin in 2010 was 14.67%, and in 2009 it was 15.44%. GAAP EPS came in at $3.35, which was +58.02%, after -1.85% in 2009.
This company has been showing new leadership in today’s market. In 2011, analysts expect non-GAAP EPS between $2.26 (-1.7%) and $2.57 (+11.7%). In 2010, non-GAAP EPS was $2.30. Q1 2011 results come out on April 20, with analysts expecting between $0.51 and $0.62. In comparison, EPS was $0.59 in Q1 2010. AT&T shares trade with a price to sales multiple of 1.4. From 2002 to 2007, the multiples were near 2. AT&T recently announced the purchase of T-Mobile. Sprint (S) is ranked #298 with a brand value of $3.53 billion. Good luck taking on AT&T and T-Mobile.
Yahoo! Inc. (YHOO): Soros reduced his stake by 35% to 2.2 million shares in the latest full quarter. It has a P/S of 3.7. The 5-year P/S average is 4.0, but its best years were in 2005 and 2006 with P/S figures of 5.9 and 4.7, respectively. Also, shares trade under $20.
The company made $6.3 billion in revenues in 2010, which was a decrease of 2.1%, after tumbling by 10.38% in 2009. The respective EBT margins were 16.92% and 8.89%. However, in 2005 and 2006, those margins were 48.38% and 17.09%, respectively.
EPS shot up by 114.29% to $0.90 in 2010, after growing by 44.83% in 2009. Analysts expect a range of $0.66 to $0.83 for 2011. In Q1 2011, the company expects operating income to come in between $130 million and $160 million. Q1 2011 results come out on April 18. Moreover, the D/E is 0.01.
Though we like these tech companies more, and the immediate future is rather static for Yahoo, any pick up of sales will lead to rapid price appreciation.