Eevery investor wants an entry, a key to unlock the best returns on the markets. For some, that key is found by following legendary market investors, stock market gurus who have leveraged their intuition and knowledge to build multibillion dollar fortunes. And among these legendary investors, David Tepper stands tall.
Tepper is the co-founder of Appaloosa Management, which he launched in 1993 after leaving Goldman Sachs. The hedge management company took off with an initial capital of $ 57 million, and since then it has never stopped growing; Appaloosa had $ 12 billion in assets under management in 2021.
In reviewing the Appaloosa equity basket, we chose three of the fund’s new holdings that TipRanks Database turns out to be “solid buys” and offers healthy upside potential. Let’s take a closer look and see what Wall Street analysts have to say.
Based on the Isle of Man under UK regulations, Paysafe is a multinational online payments processor, offering services through its namesake brand as well as through its subsidiaries including Neteller and Skrill. The company had a transaction volume of $ 92 billion last year, from businesses and consumers in 40 currencies around the world. Paysafe’s payment solutions are designed for mobile use and offer real-time analytics.
Like many companies over the past two years, Paysafe has jumped on the SPAC wagon, entering the public market through a merger transaction with a Special Purpose Acquisition Company (SPAC), in this case Foley Trasimeno Acquisition Corporation II. Paysafe and Foley completed the merger process in March of this year, and on March 31, PSFE shares began trading on the New York Stock Exchange.
Last May, Paysafe published its first report on results as a public company. For the first quarter, the company reported revenue of $ 377.4 million, up 5% year-over-year, derived from a total payment volume of $ 27.7 billion. dollars, up 8% year-on-year. The company strengthened its balance sheet with a one-time debt reduction payment of $ 1.2 billion, made after the PSPC merger, and ended the quarter with free cash flow of $ 108.5 million, in 28% increase over the quarter of last year.
Tepper, in his 13F file for the first quarter, revealed that his fund had bought 10 million shares of PSFE, a huge investment in the new stock. At current appraisal, this stake is worth $ 118.2 million.
Paysafe Coverage for RBC, 5 Star Analyst Daniel Perlin reminds investors that there are significant gains in reserve for the PSFE in 2021. Perlin rates the PSFE as an Outperforming (i.e. a Buy), and its price target of $ 19 implies an increase of 61% within one year. (To see Perlin’s track record, Click here)
“We believe that PSFE offers a unique combination of digital wallet capabilities, accelerated cash conversion for consumers who would otherwise be outside the ecom loop, and integrated payments, all focused on specialized and complex end markets, creating a competitive gap and pricing power, ”Perlin said.
Perlin adds that Paysafe offers one of the best combinations of services in the online payment space: “PSFE has created a unique bilateral network allowing merchants to accept payments online and in store (in specific vertical niches) , while providing consumers with a digital wallet and eCash solution, which converts large cash users into digital users. We believe that it is this combination that allows PSFE to generate participation rates higher than those of its peers.
Overall, it’s clear that Wall Street analysts generally agree with Perlin. Paysafe has registered 6 reviews, and all are positive, making the analyst consensus a strong buy. The average price target of $ 17.67 suggests a ~ 50% rise from the trade price of $ 11.82. (See the analysis of PSFE shares on TipRanks)
Baidu, Inc. (BIDU)
Tepper’s next pick is from China. Baidu is the largest online search engine in this country and, in fact, the largest Chinese language internet search platform. The 1.3 billion Chinese speakers make up the largest single language block in the world and give Baidu a huge natural user base. Baidu’s holds over 76% of the search engine market share in China, making it the second largest search engine in the world, and is investing heavily in AI initiatives. The company has a market capitalization of $ 64 billion.
So Baidu is great. It reached $ 4.3 billion in revenue for 1Q21, up 25% year-over-year. Diluted EPS, at $ 11.66, was light years away from the 1 cent value a year ago, and up 404% from $ 2.31 reported in 4Q20.
All of this – the strong leadership position in the research market in China and the strong earnings report – makes Baidu attractive. David Tepper, for his part, took a small step on this stock, with an initial position of 45,000 shares purchased during the first quarter. This block of shares is worth $ 8.83 million at current prices.
5 Star Analyst Jiang fawn, of Benchmark, writes of BIDU: “We are positive about the long-term growth prospects of AI-based companies in China, and BIDU is poised to benefit from favorable industry trends as a main player in AI. We believe BIDU is well positioned to become a significantly expanded TAM by capitalizing on growth opportunities in the cloud, smart transportation, smart driving, and other AI initiatives.
To that end, Jiang rates BIDU stock as a buy, with a price target of $ 370 to indicate a rise of around 95% over the next 12 months. (To look at Jiang’s background, Click here)
The word in the streets is extremely bullish for this tech stock, as TipRanks analyzes present BIDU as a strong buy. Of 19 analysts surveyed in the past 3 months, 16 say Buy while the other 3 say Hold. With a potential return of 62%, the consensual target price for the stock is $ 308.13. (See the analysis of BIDU shares on TipRanks)
DR Horton, Inc. (DHI)
Finally, Texas-based DH Horton is the largest homebuilder in the United States, by volume. The company operates in 91 markets in 29 states and has held a leadership position in the industry since 2002. In the past 12 months ending last March, DH Horton has closed 76,330 new homes. The company builds homes in a wide range of price ranges, from $ 150,000 to $ 1 million.
Over the past 12 months, shares of DHI have risen steadily. The stock rose 63% during that time, topping the S&P’s 37% year-over-year gain. In the most recent quarterly report, for fiscal 2Q21, DHI announced a 95% year-over-year increase in EPS, to $ 2.53, while revenue increased 43% to 6 , $ 4 billion. These gains come as the real estate industry recovers from the COVID pandemic. The company saw its net sales orders increase 35% from the quarter last year, to 27,059 units. The aggregate value of those orders was $ 8.8 billion, up 47%.
In addition to the ever increasing share price and financial results, DHI pays a modest dividend. At 20 cents a share quarterly, it returns a modest 0.8%; the important point here is not that the dividend is important, but that it is reliable, with a history of growth of 7 years behind it. This is another regular comeback from this solid company.
David Tepper, for his part, saw a lot to like about this stock, and his fund opened its DHI position with 1,165,000 shares, now worth $ 111 million.
BTIG Analyst Carl Reichardt also counts as a fan. Reichardt gives DHI shares a buy rating, and his price target of $ 124 suggests the stock is up 36% year-over-year. (To look at Reichardt’s record, Click here)
“This was another exceptional quarter, and DHI remains our preferred choice of large cap stocks given the company’s deep local market share positions, substantial relative growth, an efficient production business model, breadth of geographic markets, affordable entry-level domestic approach, consistent cash generation and conservative leverage, ”noted Reichardt.
Overall, analysts’ consensus on IHD is not unanimous, but almost. The consensus strong buy rating is supported by 11 buys against a single take. The shares are selling for $ 91.33 and the average price target of $ 110.25 indicates a rise of 21%. (See the analysis of DHI shares on TipRanks)
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Warning: The opinions expressed in this article are solely those of the analysts presented. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.