In this article, we will look at the 2 stocks billionaire Leon Cooperman is talking about right now. If you want to learn more about Leon Cooperman and his stock-picking strategy, you can also read Billionaire Leon Cooperman is Talking About These 4 Stocks.
2. Lithia Motors, Inc. (NYSE:LAD)
Number of Hedge Fund Holders: 40
Lithia Motors, Inc. (NYSE:LAD) is a leading American automotive retailer that deals in both new and used cars. The company has three business divisions: Domestic, Import, and Luxury. Leon Cooperman likes Lithia Motors, Inc. (NYSE:LAD) and noted that the company reported a strong second quarter in 2022. Mr. Cooperman is bullish on the company and its 2025 forecast, according to which, Lithia Motors, Inc. (NYSE:LAD) expects to grow its annual revenue to $50 billion and its annual EPS to a range between $50 and $60.
Lithia Motors, Inc. (NYSE:LAD) fits Leon Cooperman’s checklist for investing in a stock. The company is undervalued, paying dividends, and is also buying back stock. On September 13, Lithia Motors, Inc. (NYSE:LAD) announced a share repurchase program of 2 million shares of the company’s common stock. As of September 22, the stock is trading at a PE multiple of 5x and is offering a forward dividend yield of 0.73%.
On September 9, BofA analyst John Murphy revised his price target on Lithia Motors, Inc. (NYSE:LAD) to $470 from $565 but maintained a Buy rating on the shares. The analyst noted that supply chain snarls are expected to impact automobile volumes into 2023, which is causing him to revise his estimates.
As of June 30, Abrams Capital Management owns roughly 2.3 million shares of Lithia Motors, Inc. (NYSE:LAD). The fund’s stakes in the company are valued at $646 million and the investment covers 17.36% of David Abrams’ 13F portfolio.
Insider Monkey spotted 40 hedge funds that held stakes in Lithia Motors, Inc. (NYSE:LAD) at the close of Q2 2022. The total stakes of these hedge funds amounted to $2.01 billion.
Here is what investment management firm, Oakmark Funds, had to say about Lithia Motors, Inc. (NYSE:LAD) in its first-quarter 2022 investor letter:
“As is typical during periods of significant volatility, we added a new name to the portfolio. Lithia Motors (NYSE:LAD) is the largest franchised auto dealer group in the United States. The company has a long history of creating shareholder value through best-in-class operations and consistent acquisitions of smaller dealers at attractive returns. There is a long runway for management to continue creating value through such acquisitions. Management believes this will drive earnings per share to more than $50 by 2025, even as car prices return to pre-pandemic levels. Meanwhile, Lithia has a significant opportunity to further accelerate growth through Driveway, its online auto retailing platform. We believe Lithia’s existing nationwide infrastructure provides Driveway with significant competitive advantages in e-commerce, which smaller dealers will struggle to replicate. Driveway is not generating any earnings today, but it could become a major contributor over the next five to seven years. With the stock priced at less than 7x management’s 2025 EPS target and with substantial future growth potential from Driveway, we believe Lithia shares are a bargain today.”
