Dell Inc. (DELL), Netflix, Inc. (NFLX): Picks of Carl Icahn

WebMD Health Corp. (NASDAQ:WBMD)’s management stated that the company upped its revenue guidance on better-than-expected spending from pharmaceutical firms on its public portal, and seeing more commitments from Blue Cross for its private portal services. Even though the stock is up 117% YTD, the company might have more upside.

A home run

Carl Icahn took a big stake in Netflix, Inc. (NASDAQ:NFLX) when the stock of the Internet video streaming company was below $60 in late 2012. And the company has been one of the best performing stocks in the entire S&P 500, generating returns of more than 185% in 2013 alone. Carl Icahn hit the jackpot, earning well above $1 billion from a single investment!

Icahn took his big stake in Netflix, Inc. (NASDAQ:NFLX) with the hope of selling the company to a bigger technology company like Microsoft Corporation (NASDAQ:MSFT) or Apple Inc. (NASDAQ:AAPL), the plan didn’t materialize as Netflix, Inc. (NASDAQ:NFLX) quickly adopted defense mechanisms to shun a possible takeover. The company’s foray into the building of original shows has been a very successful strategy thus far. Netflix, Inc. (NASDAQ:NFLX)’s domestic subscriber additions are coming well ahead of projections of the sell-side analysts.

In addition, Netflix, Inc. (NASDAQ:NFLX) will be a big beneficiary of higher penetration levels of Internet-connected devices, which will aid its growth across the globe. The company’s ubiquitous access to shows on demand for a low monthly fee of $8 a month appeals to a much larger user base compared to the likes of HBO. Netflix, Inc. (NASDAQ:NFLX) has a lot of growth potential in the overseas markets as well, but it will take a lot of time for that segment to achieve profitability.

The takeaway

Icahn’s three picks listed above have room to run from current levels. Dell Inc. (NASDAQ:DELL) is a takeover play, WebMD Health Corp. (NASDAQ:WBMD) will be a beneficiary of increased pharmaceutical and biotech advertising and spend online, and Netflix has multiple secular drivers benefiting its business model.

It’s never a good idea to follow marquee investors blindly. And one should do their own research heavily before making investment decisions. Tracking highly successful and tough investors like Carl Icahn is always a good idea, at least for matching notes.

Ishfaque Faruk has no position in any stocks mentioned. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix. Ishfaque is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article 3 Stock Picks of Carl Icahn originally appeared on Fool.com is written by Ishfaque Faruk.

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