David Tepper's Low PE Stock Picks

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Includes: AAL, AMAT, C, CF, CVI, HPQ, IP, KLAC, LRCX, M, MDT, MET, MOS, MSFT, MU, UAL, UNH, VLO, WFC, WNR
by: Insider Monkey

Stocks with low P/E ratios are generally considered as undervalued by the market and safe to invest in. Such stocks have more potential in price growth and are thus welcomed by investors. Of course there might be legitimate reasons for low P/E ratios as well, so investors should do their due diligence before buying stocks with low P/E multiples.

In this article we will focus on the stocks in David Tepper's Appaloosa Management’s portfolio that have low P/E ratios. David Tepper is a value investor and the founder of Appaloosa Management. The fund manages $16 billion and returned around 30% in 2010. Tepper currently ranks as the 258th richest person in the world. We believe that by focusing on Tepper’s stock picks, especially stocks with low P/E ratios, investors are more likely to beat the market.

Company

Ticker

Value (x1000)

P/E Ratio

Return since June

U S AIRWAYS

LCC

109429

5.23

-31.31%

HEWLETT PACKARD

HPQ

104223

5.55

-35.96%

LAM RESH CORP

LRCX

50359

6.75

-14.50%

APPLIED MATERIALS

AMAT

85204

7.26

-17.88%

CITIGROUP INC

C

299885

7.93

-37.74%

VALERO ENERGY

VLO

198474

7.96

-27.64%

K L A TENCOR CORP

KLAC

53861

8.61

-3.04%

INTERNATIONAL PAPER

IP

151995

9.24

-17.69%

WELLS FARGO

WFC

81566

9.48

-12.49%

MICROSOFT CORP

MSFT

102542

9.51

-1.01%

MOSAIC CO.

MOS

161877

9.86

-15.50%

MICRON TECHNOLOGY

MU

108697

10.02

-18.18%

C V R ENERGY

CVI

180576

10.18

-7.35%

C F INDUSTRIES

CF

122898

10.27

2.61%

UNITEDHEALTH

UNH

68400

10.68

-7.32%

MACYS INC

M

184581

11.23

-6.69%

MEDTRONIC INC

MDT

55640

11.76

-11.86%

METLIFE INC

MET

61861

12.31

-35.74%

WESTERN REFINING

WNR

50567

13.23

-24.74%

UNITED CONTINENTAL

UAL

125953

13.8

-8.26%

Click to enlarge


U S AIRWAYS GROUP INC NEW (LCC):
US Airways Group is an airline holding company. LCC has a P/E ratio of 5.23 and a market cap of $995.19M. Tepper invested $109M in the stock, which lost 31.31% since the end of June. Jeffrey Vinik also had $40 million of LCC.

HEWLETT-PACKARD CO (NYSE:HPQ): HP is a provider of products, technologies, software, solutions and services. HPQ has a P/E ratio of 5.55 and a market cap of $47.81B. Tepper invested $104M in the stock, which lost 35.96% since the end of June. John Paulson had $855 million invested in HPQ (see John Paulson’s top stock picks).

LAM RESH CORP (NASDAQ:LRCX): Lam Research is a supplier of wafer fabrication equipment and services. LRCX has a P/E ratio of 6.75 and a market cap of $4.72B. Tepper invested $50.4M in the stock, which lost 14.50% since the end of June. Ken Griffin had $68 million invested in LRCX.

APPLIED MATERIALS INC (NASDAQ:AMAT): Applied provides manufacturing equipment, services and software to the global semiconductor, flat panel display, solar photovoltaic and related industries. AMAT has a P/E ratio of 7.26 and a market cap of $14.02B. Tepper invested $85.2M in the stock, which lost 17.88% since the end of June. Ken Fisher had $525 million invested in AMAT shares (check out Fisher’s top stock picks).

CITIGROUP INC (NYSE:C): Citigroup is a global diversified financial services holding company. C has a P/E ratio of 7.93 and a market cap of $77.62B. Tepper invested $300M in the stock, which lost 37.74% since the end of June. John Paulson and Bruce Berkowitz both invested more than $1 billion in Citigroup.

VALERO ENERGY CORP NEW (NYSE:VLO): Valero is a North America’s independent petroleum refiner and marketer. VLO has a P/E ratio of 7.96 and a market cap of $10.69B. Tepper invested $198M in the stock, which lost 27.64% since the end of June. Steven Cohen also invested over $100 million in VLO.

K L A TENCOR CORP (NASDAQ:KLAC): KLA-Tencor is engaged in the design, manufacture and marketing of process control and yield management solutions for the semiconductor and related nano electronics industries. KLAC has a P/E ratio of 8.61 and a market cap of $6.53B. Tepper invested $53.9M in the stock, which lost 3.04% since the end of June. Jean-Marie Eveillard had $148 million of KLAC shares.

INTERNATIONAL PAPER CO (NYSE:IP): International Paper is a global paper and packaging company. IP has a P/E ratio of 9.24 and a market cap of $10.62B Tepper invested $152M in the stock, which lost 17.69% since the end of June. Ron Gutfleish invested $30 million in IP.

WELLS FARGO & CO NEW (NYSE:WFC): Wells Fargo is a diversified financial services company. WFC has a P/E ratio of 9.48 and a market cap of $131.31B. Tepper invested $81.6M in the stock, which lost 12.49% since the end of June. Warren Buffett had $9.9 billion invested in WFC stocks. John Paulson and Ken Fisher were also main investors in the stock.

MICROSOFT CORP (NASDAQ:MSFT): Microsoft Corporation is engaged in developing, licensing and supporting a range of software products and services. MSFT has a P/E ratio of 9.51 and a market cap of $215.07B. Tepper invested $103M in the stock, which lost 1.01% since the end of June. Boykin Curry, Jean-Marie Eveillard and Ken Fisher all had over $400 million of MSFT shares. David Einhorn also had $385 million of the stock.

Disclosure: I am long C, MSFT.