Herbalife Ltd. (HLF), Netflix, Inc. (NFLX): Carl Icahn’s Favorite Companies

An offshore driller

The Department of Justice lawsuit over the Deepwater Horizon oil spill still weighs on Transocean LTD (NYSE:RIG) shares. While Transocean has agreed to pay $1.4 billion over 5 years to settle various criminal and civil charges, parts of the lawsuit are still ongoing and have cast uncertainty on Transocean LTD (NYSE:RIG)’s ultimate liability.

Aside from the lawsuit, the fundamentals for Transocean LTD (NYSE:RIG) are solid. The rig operator has an order backlog of $28.5 billion that should provide earnings visibility going forward. Half of Transocean LTD (NYSE:RIG)‘s revenues come from ultra deepwater rigs that are extremely in demand. Transocean also pays a solid 4.62% dividend and is expected to grow earnings by over 27% a year for the next 5 years.

Conclusion

Even though we may not all be corporate activists, we can take advantage of Carl Icahn’s wisdom and invest in the companies that Icahn likes. From that perspective, Transocean LTD (NYSE:RIG) and Herbalife are buys because of their growth and earnings power. Investors should not heed the corporate titan’s advice on Netflix, however, because it could see tougher competition ahead. Regardless of how the three stocks perform going forward, Carl Icahn will still be going strong.

The article Carl Icahn’s Favorite Companies originally appeared on Fool.com and is written by Jason Bond.

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

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