This 149-Bagger Has Been Buying Verizon, Schlumberger, and DuPont

Does this 4.5% dividend yield interest you?

Mar 11, 2014 at 5:16PM

The latest 13F season is here, when many money managers issue required reports on their holdings. It can be worthwhile to pay attention, as you might get an investment idea or two by seeing what some major investors have been buying and selling.

For example, consider Appaloosa Management, founded by investing giant David Tepper and known for investing in the debt of companies in distress. Tepper's investing history includes debt and stock in companies such as Enron and Worldcom. He made billions on bank stocks in 2009 after they had imploded and before they recovered. In a letter to shareholders last year, Tepper noted that had one invested $1 million in his hedge fund in 1993, it would have grown to $149 million over the past 20 years. Investing in the S&P 500 instead would have left you with $5.3 million. Tepper's performance reflects an average annual net gain of 28%. Wow.

Appaloosa Management's latest 13F report shows that it has initiated new positions in Verizon Communications (NYSE:VZ), Schlumberger N. V. (NYSE:SLB), and E.I. DuPont de Nemours and Company (NYSE:DD).

Verizon offers investors more than its fat 4.5% dividend yield. Its fourth quarter was its fourth in a row to feature double-digit earnings growth, with earnings up 74% over year-ago levels. Operating revenue for the quarter was 3.4% higher than in the year before at $31.1 billion. For the full year, free cash flow surged 45% between 2012 and 2013. Verizon recently bought the 45% of Verizon Wireless that it didn't own from Vodafone. Bulls like Verizon for the fat margins and growth rate of Verizon Wireless, as well as its dividend. Analysts at Morgan Stanley and JPMorgan Chase recently rated the stock favorably, too.

Energy services giant Schlumberger has many investors excited thanks to great potential in shale, which might fuel earnings for years to come. The company's fracking technology is helping to grow the natural-gas business, and its geographic diversification has it profiting all over the globe. Its fourth quarter was solid, featuring revenue up 7.5% over year-ago levels and earnings up 28%. Schlumberger stock yields 1.7%, which reflects a recent 28% dividend increase. The $121 billion company also aims to buy back some $10 billion worth of its stock. Schlumberger's forward price-to-earnings ratio of 13.5 suggests that it's appealingly valued despite having risen 21% over the past year.

DuPont's operations are more far-flung than you probably think, including agriculture (where it's a player in seeds and genetically modified organisms), industrial biosciences, nutrition and health, performance materials, and pharmaceuticals. The company's revenue growth has been slowing, so it has been restructuring itself, in part via spin-offs and also by investing in advanced biofuels, among other things. It has been becoming less of a chemicals company and more of an agricultural one. DuPont's fourth-quarter revenue was up 6% over year-ago levels, and its operating earnings per share nearly tripled. DuPont stock yields 2.7%.

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Selena Maranjianwhom you can follow on Twitter, owns shares of JPMorgan Chase and Verizon Communications. The Motley Fool recommends Vodafone and owns shares of JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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