Join        Login             Stock Quote
Top News :  

Carl Icahn Loves These 4 Stocks -- Should You Buy Too?
By: StreetAuthority   Thursday, March 1, 2012 10:12 AM
(Nasdaq: WBMD) -- Increased position
Icahn acquired 5.7 million shares of WebMD last quarter, raising his total stake to 11.6%. His current stake is worth more than $200 million.

This leading health care information website is struggling due to reduced advertising spending by drug makers. Shares have plummeted 57% in the past 12 months, and 2012 is expected to be challenging as well. WebMD is expecting declining revenue and a possible $2 million operating loss this year. 

Despite these problems, as my colleague David Sterman pointed out in this article, WebMD's long-term growth story remains very much intact. The company is a vital resource for patients seeking medical information and likely to grow in tandem with the senior citizen population, which has a voracious appetite for health care services. The downturn in ad spending is likely only a temporary slowdown in the company's upward growth trajectory.

Icahn knows WebMD will turn profitable when ad spending picks up and opposed the company's plan to sell itself. Instead, he suggested  WebMD use its cash to buy back stock. The company must be listening; WebMD announced plans to repurchase $150 million worth of stock, or 11% of outstanding shares. With cash of $1.1 billion nearly equal to its $1.4 billion market value, WebMD shares have little downside risk

Risks to consider: Not every Icahn investment is a home-run. For example, bids for Clorox (NYSE: CLX) and Commercial Metals (NYSE: CMC) failed when he couldn't sway enough shareholders. You should think of Icahn's portfolio as a starting point for your own research, not a reason to invest.

Action to take --> Icahn is most successful when he acquires stakes in smaller companies and can exert more control. This is why my top picks are the two smallest companies discussed in this article, WebMD and CVR Energy. Navistar is bigger, with a $3.1 billion market value, and El Paso qualifies as a large-cap stock based on its $21.4 billion market capitalization.

Lisa Springer

Lisa Springer does not personally hold positions in any securities mentioned in this article. StreetAuthority LLC owns shares of CHK in one or more if its "real money" portfolios.

<< Previous Page12  
Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:


Related Press Releases
Popular Articles
Recent Articles by StreetAuthority

Subscribe to Email Alerts rss feed or RSS feeds rss feed for articles from more than 800 contributors and press releases, SEC filings and full text news from thousands of sources.

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.