In this installment of my analysis of recent purchases made by renowned investors, I will look at stocks bought by Philippe Laffont's Coatue Management using the latest available SEC filings of the fund. The hedge fund focuses on the technology, media and telecom sectors. For this article, I have selected four stocks purchased by the fund during the 3rd quarter of last year, which offer a minimum return of 20% from current levels.
Intuit Inc. (NASDAQ:INTU)
Intuit is a $16.7 billion company by market capitalization and is a provider of popular small business products such as QuickBooks, Quicken and TurboTax. The stock price appreciated by 81% during the last five years compared with the 15% increase in the NASDAQ during the corresponding time period.
Coatue Management initiated a new position in INTU by acquiring 3.8 million shares at an estimated price of $47 a share. The investment has been fairly successful with the stock currently trading at $56. I see further upside from current levels. The company is expected to grow its earnings at an annual rate of 14% compared with the projected 20% growth rate of the software and programming industry. Applying my estimated P/E of 24.3 to 2012 EPS estimate of $2.92, my initial price target for INTU is $71 a share. A return of 26% is possible from current levels.
Apple and Exxon Mobile (NYSE:XOM) have been competing for the title of the world's most valuable company (by market cap) for the last year. After its blowout earnings last week, Apple's stock zoomed ahead overtaking XOM in terms of market capitalization. AAPL shares continued their upward momentum on Tuesday, January 31, 2012, by closing at an all-time high of $456.48 with a market capitalization of $425 billion.
Coatue Management slightly increased its position in AAPL by purchasing 19,000 shares at an estimated average price of $380. AAPL is expected to grow its earnings at an annual rate of 19% compared with the 61% growth rate of the previous five years. Applying a P/E of 14.6 to the 2012 average analyst EPS estimate of $42.14, my price target of $615 is obtained. So there you have it folks, the world's most valuable company is still considerably undervalued.
Citrix System, Inc. (NASDAQ:CTXS)
Citrix has been a strong performer in the stock markets with the stock doubling in price during the past five years. The company grew its earnings at an annual rate of 11.4% during this time period and is expected to grow at a faster pace of 18% in the medium to long term.
Coatue initiated a new position in CTXS by purchasing approximately 1.17 million shares at an estimated average price of $64 a share. The stock currently trades at $65. My 12-month price target for CTXS is $82 a share obtained by applying a multiple of 30 to 2012 EPS estimate of $2.74. CTXS therefore offers a total return of 26% from current levels.
Silicon Laboratories (NASDAQ:SLAB)
Silicon Laboratories is the relatively unknown name on this list with a market capitalization of $1.84 billion. SLAB designs and develops integrated circuits that convert analog signals into digital signals that can be processed by electronic products. Coatue Management initiated a new position in SLAB by acquiring approximately 2.15 million shares at an estimated average price of $36 a share compared with the current price of $44. The company is expected to grow at an annual rate of 21% handily beating the 16% growth rate of the semiconductor industry.
My target of $53 is obtained by applying a P/E of 26 to 2012 EPS estimate of $2.06. A return of 22% is possible from current levels.
As always, please do not consider this a "buy" list, rather use this list as a starting point for your research. All companies listed appear attractive based on fundamentals and growth prospects.