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Rob Citrone is one of the Tiger Cubs. Before founding Discovery Capital Management, he worked as a portfolio manager at Fidelity Investments and Julian Robertson’s Tiger Management. Discovery Capital has a tilt toward technology, services, basic materials and financial sectors and focuses on liquidity, valuation multiples, past and potential growth when picking stocks. Discovery Global Opportunity was up 3.7% through the end of October last year, when many other funds suffered losses due to the European debt crisis.

In this article, we are going to take a look at Citrone’s stock picks with high upside potential. All companies have at least $10 billion market cap and their analyst recommendation scores are lower than 2.5 (5=strong sell, 4=sell, 3=hold, 2=buy, 1=strong buy). The market data is sourced from Finviz.

Company Name

Ticker

Value

Activity

Analyst Recom.

APPLE INC

AAPL

837796

4%

1.7

QUALCOMM INC

QCOM

172077

New

1.9

VISA INC

V

166972

-27%

1.7

NATIONAL OILWELL VARCO

NOV

45487

7%

1.6

HALLIBURTON

HAL

44337

74%

1.7

SYMANTEC CORP

SYMC

43400

0%

1.9

UNITEDHEALTH

UNH

35047

165%

1.8

THERMO FISHER

TMO

20818

New

1.8

National Oilwell Varco Inc (NYSE:NOV) has the highest upside potential among the stocks listed above. The average analyst recommendation score for NOV is only 1.6. As of September 30, 2011, Citrone’s Discovery Capital disclosed to own $45.5 million worth of NOV shares. NOV has a market cap of $31.3B and a P/E ratio of 16.83%. It returned 44.51% so far since the end of the third quarter, heavily beating the 14.84% for SPY in the same period. Together with Discovery Capital, there are other 37 hedge funds with NOV positions at the end of the third quarter. For example, Ken Fisher’s Fisher Asset Management had $362 million invested in NOV. Jim Simons’ Renaissance Technologies also reported to own $102 million worth of NOV shares at the end of September.

During the third quarter, Citrone’s Discovery Capital initiated a brand new $172 million of Qualcomm Inc (NASDAQ:QCOM), which returned 15.09% since the end of September. The stock has a market cap of $94B and a P/E ratio of 20.57. The analyst recommendation score for QCOM is 1.7. QCOM is also very popular among hedge funds. As of September 30, there are 66 hedge funds disclosed owning QCOM in their 13F portfolios, including Stephen Mandel’s Lone Pine Capital, Lee Ainslie’s Maverick Capital, and Ken Fisher’s Fisher Asset Management.

Other large-cap stocks with high upside potential that Citrone likes include Apple Inc (NASDAQ:AAPL), Visa Inc (NYSE:V), Halliburton Company (NYSE:HAL), and UnitedHealth Group Inc (NYSE:UNH). We like Citrone and Discovery Capital. We believe that by focusing on Citrone’s stock picks, especially those with high upside potential, investors are more likely to beat the market in the long run.



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

Source: Rob Citrone's Stock Picks With High Upside Potential