After going through the latest filings, we screened for companies that billionaire George Soros bought recently. Here’s what we think of his newest moves.
CSX (CSX): Soros bought 169,400 shares in Q4 2010 at an average price of $61.51. In sum, he owns 179,300 shares at an average price of $42.27. We are optimistic about CSX. The growing economy provides a favorable backdrop and savings of $130 to $140 million should combat fuel inflation. However, we believe that the current price to sales ratio is a bit too high, and should be near 2.4. We expect revenues to grow by 10% to $11.704 B, and place a price target of $73. In our eyes, take profits when the technicals show strong downward pressure.
American Science & Engineering (ASEI): Soros bought 111,388 shares in Q4 2010 with an average price of $81.64.
From 2004 to 2010, the respective price to sales multiples were 3.9, 3.8, 3.7, 3.1, 3.3, 3.0, and 2.8, respectively. The company has demonstrated strong revenue and non-GAAP EPS growth thus far. We believe that these shares should be trading 3.2 times sales per share because we expect revenue growth to be at 20% for FY 2011 ($290.4 M) and non-GAAP EPS to come in at $5.06 (+26.4%). For Q4 2011, we expect revenues of $79.532 M (+11.6%) and a non-GAAP EPS of $1.45 (+8.2%). We place a price target of $100.75. Given that these revenue and EPS targets are met, you’re looking to make 10% by the next earnings release.
Banco Popular (BPOP): Soros sold 10,327,800 shares in Q4 2010 with an average price of $2.88, and made 5.2%. He currently owns 295,400 shares at an average price of $2.69 per share.
From 2001 to 2006, the price to sales multiples were 2.6, 2.7, 3.1, 3.9, 2.6, and 2.2, respectively, and the company is far from replicating performance in those years to merit those multiples. We expect revenues to decline by 25% to $1.935 B, and place a price target of $2.20. However, based on the current share price, investors expect revenues of $2.65 B.
Banco Popular is a full service financial provider based in Puerto Rico with operations in Puerto Rico and the United States. Popular is the leading banking institution by both assets and deposits in Puerto Rico, and ranks 35th in assets among U.S. banks. With 193 branches in Puerto Rico, Popular offers retail and commercial banking services, as well as auto and equipment leasing and financing, mortgage loans, investment banking and broker-dealer services. In the United States, Popular has established a community-banking franchise providing a broad range of financial services and products with branches in New York, New Jersey, Illinois, Florida and California.
Coca-Cola Enterprises (CCE): Soros purchased 2,187,500 shares in Q4 2010 at an average price of $24.63 per share. He owns a total of 2,358,900 shares at an average price of $24.71.
The company expects non-GAAP EPS to come in between $1.95 and $2.00, and revenue is expected to grow in a mid single-digit range. Due to the challenging environment in Europe, we expect revenues to grow by 5% to $7.045 B, and we place a price target of $29. This is not an enthusiastic buy recommendation, but it is still a buy at current price levels. Unlike some of us, Soros got in at a good price level.
On October 2, 2010, Coca-Cola Enterprises Inc. (Legacy CCE) completed a merger with The Coca-Cola Company (TCCC) and separated its European operations, Coca-Cola Enterprises (Canada) Bottling Finance Company, and a related portion of its corporate segment into a new legal entity which was renamed Coca-Cola Enterprises, Inc. at the time of the merger.
Concurrently with the merger, two indirect, wholly owned subsidiaries of CCE acquired TCCC’s bottling operations in Norway and Sweden, pursuant to the share purchase agreement dated March 20, 2010 (the Norway-Sweden SPA), for a purchase price of $822 million plus a working capital adjustment of $55 million.
The company’s bottling territories consist of Belgium, continental France, Great Britain, Luxembourg, Monaco, the Netherlands, Norway, and Sweden. The aggregate population of these territories was approximately 165 million at December 31, 2010.
Cognizant Technologies (CTSH): Soros purchased 76,400 shares in Q4 2010 at an average price of $67.20. In sum, he owns 144,200 shares at an average price of $57.08.
The company is providing the following guidance:
· First quarter 2011 revenue is anticipated to be at least $1.36 billion.
· First quarter 2011 diluted EPS is expected to be $0.63 on a GAAP basis and $0.67 on a non-GAAP basis, which excludes $0.04 of estimated stock-based compensation expense.
· Fiscal 2011 revenue is expected to be at least $5.79 billion, up at least 26% compared to 2010.
· Fiscal 2011 diluted EPS is expected to be at least $2.68 on a GAAP basis, and $2.85 on a non-GAAP basis, which excludes $0.17 of estimated stock-based compensation expense.
These are conservative estimates, but given the highly competitive nature of this industry, we agree with company guidance. We also believe CTSH shares are trading a bit expensive, and they belong near 5.2 times sales per share. We place a price target of $97.50, which is 20% higher than current price levels. Buy CTSH.
Cognizant is a leading provider of information technology, consulting, and business process outsourcing services, dedicated to helping the world's leading companies build stronger businesses.
NetApp (NTAP): Soros initiated a buy on 220,500 shares in Q4 2010 at an average price of $52.65.
We believe that these shares are undervalued, and should be trading near 5 times sales per share. The reality is that this company is about to post 35%-plus in EPS growth and revenue growth in excess of 30%, and profit margins are at the highest levels in the post-2001 era. We place a price target of $64. Fundamentally, one should make over 35%. This is a good buy opportunity if the market wakes up and gives NetApp a deserving multiple.
NetApp creates innovative storage and data management solutions that deliver outstanding cost efficiency and accelerate business breakthroughs.
Qualcomm (QCOM): In Q4 2010, Soros bought 356,893 shares at an average price of $47.03. Previously, in Q3 2010, he bought 473,996 shares at an average price of $39.04. In total, he owns 1,079,204 shares at an average price of $42.21.
QCOM shares trade with a price to sales multiple of 7.5. These shares have historically traded at these lofty multiples. Due to the company’s significant market presence and global strategy, we expect revenues to grow by 30% to $14.28 B, and place a price target of $65.
RF Micro Devices (RFMD): Soros bought 2,110,712 shares at an average price of $7.15 in Q4 2010. In total, he owns 2,153,212 shares at an average price of $5.51.
The company has stated that it expects revenues in Q4 2011 to decline seasonally by 10% to 15%. Thus, we expect $1.06 B in revenues in FY 2011, and place a price target of $6. We advise investors to take profits now.
RF Micro Devices is a global leader in the design and manufacture of high-performance semiconductor components. RFMD's products enable worldwide mobility, provide enhanced connectivity and support advanced functionality in the cellular handset, wireless infrastructure, wireless local area network (WLAN), CATV/broadband and aerospace and defense markets. RFMD is recognized for its diverse portfolio of semiconductor technologies and RF systems expertise and is a preferred supplier to the world's leading mobile device, customer premises and communications equipment providers.
Steel Dynamics (STLD): Soros initiated a buy on 969,200 shares at an average price $15.89 per share in Q4 2010.
Given previous earnings and revenues growth figures, we state that STLD shares should be trading near 1.0 times sales per share. We also expect revenues to grow by 25% to $7.88 B and non-GAAP EPS to grow by 120% to $1.47. We also place a price target of $33.50, which is 75% above the current share price. Buy this.
The company expects first quarter earnings per diluted share to be in the range of $0.37 to $0.42. In recent months, the company has experienced increased volumes and margins in all of its operations, although to a much smaller extent at its Structural and Rail Division and fabrication operations, which are more directly impacted by the commercial construction markets. The demand for sheet and special bar quality steels remains robust and the increase in steel utilization rates continues to strengthen demand for recycled ferrous materials.
The company is one of the largest steel producers and one of the largest metals recyclers in the US based on a current estimated annual steelmaking capability of 6.4 million tons and actual recycling volumes.
Tenet Healthcare (THC): Soros bought 2,373,783 shares at an average price of $4.93 in Q4 2010. In total, he owns 2,396,183 at an average price of $4.96 per share.
Due to the retirement of a Department of Justice obligation and steady growth, we expect revenue growth of 3% to $9.48 B and non-GAAP EPS growth of 20.6% to $0.35. The current P/S multiple is appropriate, and we place a price target of $8.50, which would be 13% on your money.
Tenet Healthcare is a health care services company whose subsidiaries and affiliates own and operate acute care hospitals, ambulatory surgery centers and diagnostic imaging centers.