Pro Picks: 4 Blistering Energy Plays out of David Einhorn's Portfolio
Investing.com | Jul 14, 2023 21:05
It’s been a fantastic year for billionaire value investor David Einhorn: His Greenlight Capital portfolio roared higher in 2022, with returns rocketing some 37% through year-end. After that stunning outperformance, let’s dig through his holdings and see if we can find anything that can still be picked up for cheap.
Thanks to Civitas Resources (NYSE:CIVI).
InvestingPro subscribers can pull up a flood of investing ideas for their portfolio by clicking into the Ideas tab on the desktop view. That provides an immediate look at the publicly traded holdings of a vast directory of portfolios - including those of billionaire investors like Warren Buffett, Bill Gates - and David Einhorn.
Source: InvestingPro
But InvestingPro doesn’t just give you a bird’s-eye view of returns, or a simple list of a portfolio’s holdings. You can reorder those stocks by a variety of metrics to produce the most interesting ideas that suit your own investing style and goals.
In our case, we are scouring for dirt-cheap shares that look poised for nice gains, and InvestingPro gives us the ability to pick out the lowest-priced stocks per their trailing P/E ratios:
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One such energy stock - as well as one that looks enticing across a variety of other metrics - is Southwestern Energy (NYSE:SWN), with its trailing P/E of 4.3x. Importantly, its forward P/E ratio is also a dirt-cheap 5.4x.
David Einhorn initiated his Greenlight Capital position in Civitas last year and had nearly quadrupled it by the end of the first quarter, to some 460,000 shares and 1.7% of his portfolio. And part of what appeals to him may be the company’s soaring top- and bottom-line trends - which crush the rest of the sector, as InvestingPro data shows.
Altogether, the stock has notched a rare Excellent Performance InvestingPro health rating of 5 out of 5 thanks to its staunch profitability, growth, cash position, and relative value metrics - which places it in the cream of the crop for energy companies operating in developed markets.
Source: InvestingPro
Fittingly, the oil and natural gas producer has also achieved an outstanding 3.92 InvestingPro raw health score - and for the past 7 years, stocks with at least a 2.75 rating have outrun the S&P 500. That feat aligns with the company’s Piotroski score of 8 out of 9, which likewise stands as a clear indicator of its financial strength and sure management.
Civitas particularly flattens peers in its cumulative revenue and operating income growth figures over the past five years (roughly 1,680% and 8,600%, respectively), as InvestingPro data shows. It maintains brawny profit margins, and also outpaces the vast majority of the energy sector in five-year EPS cumulative growth. In terms of its cash position, Civitas sports an exceptional cash flow to total debt ratio of some 580%, as well as about a 60x interest coverage ratio - which should certainly help investors sleep at night.
Civitas also returns cash to shareholders in spades: Its current dividend yield is a generous 11.1%.
Jefferies, KeyBanc, and MKM Partners rank among the many research firms that call the stock a buy, and even after a four-year share price return of more than 300% - and a jump of more than 30% year to date - InvestingPro fair value puts upside in Civitas at an astonishing 60% above current levels.
Want to see the full list of this week’s Pro Picks culled from David Einhorn's portfolio? Start here to unlock must-have insights and data . And while you’re here, dig into InvestingPro’s wealth of tools and screeners to begin building a lucrative portfolio.
If you're already an InvestingPro subscriber, this week's full Pro Picks list is available here.
Data as of July 13, 2023.
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