Billionaire Glenn Dubin’s High Upside Potential Picks Include Transocean

A more pure-play equipment rental company, United Rentals, Inc. (NYSE:URI) also makes our list of Dubin’s favorite stocks which satisfy the criterion of a low PEG ratio (0.6 in this case). United Rentals carries an even higher beta than Hertz does, at 3.1. At a market capitalization of $4.9 billion, it too boasts a forward P/E of only 9 as earnings are expected to be much higher than they were in the last four quarters. Point State Capital cut its stake in United Rentals last quarter but still disclosed ownership of 2.2 million shares; that fund is managed by Sean Cullinan (check out Point State’s stock picks).

Highbridge owned 1.9 million shares of Broadcom Corporation (NASDAQ:BRCM), the $20 billion market cap semiconductor company. Billionaire Ken Griffin’s Citadel Investment Group also liked Broadcom, increasing its holdings by 19% between October and December (research more stocks Griffin was buying). While earnings were down in the fourth quarter of 2012 versus a year earlier, sales were up and the financial community seems to expect the bottom line to run positive as well over the next couple years: Broadcom carries trailing and forward P/Es of 28 and 11, respectively.

Transocean LTD (NYSE:RIG) rounds out our list of Dubin’s picks with high upside potential: the five-year PEG ratio here is 0.5, with the fund reporting ownership of 1.2 million shares in its 13F. Various costs related to the Deepwater Horizon disaster- as well as high activity in onshore drilling, which is cheaper than offshore- have held Transocean back a bit but analyst consensus implies a forward earnings multiple of 9. Billionaire activist Carl Icahn initiated a position in Transocean in the fourth quarter (see more stocks Icahn likes) and more recently filed to report crossing the 5% ownership threshold.

Disclosure: I own no shares of any stocks mentioned in this article.