3 Top Stocks in Carl Icahn's Portfolio: Cheniere Energy, Newell Brands, and Naistar International

Billionaire investor Carl Ichan is known for his  contrarian investing strategies. He invests through his diversified conglomerate holding company, Ichan Enterprises, and was ranked #11 on the Forbes “Highest Earning Hedge Fund Managers 2019” list. In 2017, Ichan served as a special economic advisor to the White House for the Trump administration but left due to conflict of interest. His specialty is the energy industry; he made most of his fortune investing in the oil and natural gas industry. However, he has taken an  active interest in several consumer goods and automobile companies lately, given changing market trends.

Ichan’s investment prowess can be gauged by  the returns he has generated over the years. He entered Wall Street in 1968 with an initial investment of $100,000. Over the course of the next 47 years Ichan has generated 31% returns at an annualized rate, making him one of the most profitable investors.

During the onset of the coronavirus pandemic, Ichan took short positions in major stocks and by so doing cashed in when the market corrected in March last year. However, because most stocks plummeted to all-time lows, he advocated a value investing strategy and  purchased shares while the market was down. In fact, Ichan said in a CNBC interview: “Now it’s reached a point that there are some companies that are sort of just given away. Some of these companies are awfully cheap, they’re very cheap.”

Following Ichan’s footsteps could be very profitable for retail investors. Cheniere Energy, Inc. (LNG), Newell Brands Inc. (NWL), and Navistar International Corporation (NAV) are some of the most popular stocks that are part of the billionaire investor’s portfolio, and returns for these stocks are expected to be good.

Cheniere Energy, Inc. (LNG)

LNG operates as an energy infrastructure company, dealing with the production and supply of liquified natural gas. It operates through two segments – terminal business and natural gas marketing. It has a combined terminal pipeline length of 117 miles across the U.S. LNG is currently planning to expand its marketing division to Singapore, Chile, and the UK.

LNG is the largest liquified natural gas producer in the United States, and second largest in the world. It has operations in more than  35 countries, with seven operations trains, which hit a production record of 1250 cargoes on  October 31.

The reduced demand for natural gas and related production because of depressed industrial production affected LNG’s operations. However, the company managed to generate total revenues of $1.46 billion in the third quarter ended September 30, 2020. Its net income for nine months ended September 30, 2020 was $109 million, 137.5% higher than the negative year-ago value. Its consolidated adjusted EBITDA has risen 48% year-over-year to $2.91 billion, over the nine-month period.

The consensus EPS estimate of $3.11 for fiscal 2021 indicates an 81.9% improvement year-over-year. The company has an impressive earnings surprise history as well; it beat the Street’s EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $10.70 billion for the current year represents  a 15% rise from the same period last year.

LNG has gained more than 140% since hitting its 52-week low of $27.06 in March. The stock hit its 52-week high of $69.35 on January 12.

How does LNG stack up for the POWR Ratings?

A for Trade Grade

A for Buy & Hold Grade

A for Peer Grade

B for Industry Rank

A for Overall POWR Rating.

In the 108-stock Energy – Oil & Gas industry, LNG is currently ranked #3.

Newell Brands Inc. (NWL)

NWL manufactures and distributes consumer goods and commercial products through an assortment of brands. Its products can be categorized into three segments – Food and Appliances, Home and Outdoor Living, and Learning and Development. The company sells its products through its website, distinctive retail chains, distributors, and e-commerce platforms.

Last November, NWL announced a debt tender offer to repurchase outstanding senior notes and other debt securities worth $300 million. By reducing its debt burden, NWL’s market credibility and profitability should rise significantly in the months to come.

NWL’s net sales have risen 5.1% year-over-year to $2.70 billion in the third quarter ended September 30, 2020. Its gross profit has increased 7.9% from the year-ago value to $914 million. The company reported net income of $304 million for this period, up 148.6% from a negative year-ago value. Its EPS has increased substantially to $0.72.

The consensus EPS estimate of $0.48 for the fourth quarter ended December 2020 indicates a 14.3% rise year-over-year.  Moreover, NWL beat the Street’s EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $9.74 billion for fiscal 2021 indicates a 4.8% rise from the prior year.

NWL has gained more than 130% since hitting its 52-week low of $10.44 in March. The stock hit its 52-week high of $24.57 yesterday.

NWL’s POWR Ratings reflect this bullish outlook. It is rated “Strong Buy”, with an “A” for Trade Grade, Buy & Hold Grade and Peer grade, and a “B” for Industry Rank. It is currently ranked #9 of 66 stocks in the Home Improvement & Goods industry.

Navistar International Corporation (NAV)

NAV is an automotive company that specializes in commercial trucks and buses, diesel engines and parts. The company has a financial services arm, which deals with foreign finance operations and  financing retail and wholesale production sales.

This month NAV announced the sale of its facility at Melrose Park. The company is streamlining its operations to be  a leading company in the engine manufacturing segment and the Melrose facility is not aligned with this business goal. Proceeds from the sale of the facility should give NAV sufficient funding to expand its primary operations.

NAV reported global operations segment revenue of $12 million in the fiscal fourth quarter ended October 31, 2020. Its cash and cash equivalents balance as of October 31, 2020 stood at $1.84 billion, up 34.5% from the same period last year.

Analysts expect NAV’s EPS to rise 97.2% in the current quarter ending January 31, 2021. The consensus revenue estimate of $9.14 billion for fiscal 2021 represents  a 21.8% increase over the same period last year.

NAV gained 201.5% to hit its 52-week high of $45.25 in October last year since hitting its 52-week low of $15.01 in March. The stock is currently trading just 2.9% below its 52-week high.

It is no surprise that NAV is rated “Strong Buy” in our POWR Ratings system. It has an “A” for Trade Grade, Buy & Hold Grade, and Industry Rank. It is currently ranked #18 of 51 stocks in the Auto & Vehicle Manufacturers industry.

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LNG shares were trading at $65.84 per share on Friday afternoon, down $0.16 (-0.24%). Year-to-date, LNG has gained 9.68%, versus a 0.81% rise in the benchmark S&P 500 index during the same period.

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities.

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