Billionaire Michael Price’s Cheap Stock Picks Include Pfizer Inc. (PFE)

Kaiser Aluminum Corp. (NASDAQ:KALU) was another of Price’s cheap stock picks with the filing disclosing ownership of a little over 300,000 shares. Earnings have been up here, going by recent reports, though revenue has been down moderately and so we’d be concerned that these improvements on the bottom line will not be sustainable (as they rely entirely on fatter margins). With Wall Street analysts forecasting a small decline in net income next year, the stock trades at 13 times forward earnings estimates. The stock is about flat year to date, underperforming the broader market.

According to the 13F, MFP had about 590,000 shares of Pfizer Inc. (NYSE:PFE) in its portfolio. Pfizer Inc. (NYSE:PFE) carries trailing and forward P/Es of 13 and 12, respectively; the company has been spinning out assets in the past few years, from its child nutrition business to its animal health operations. This has reduced revenue, but earnings grew by 53% in the first quarter of 2013 versus a year earlier and it’s possible that a more focused company could continue to do well. Fisher Asset Management, managed by billionaire Ken Fisher, had Pfizer Inc. (NYSE:PFE) as its top single-stock holding in its 13F for the first quarter (find Fisher’s favorite stocks).

Pfizer Inc. (NYSE:PFE) seems like it is worthy of further research, though we would want to check that its declining sales can be explained by its divestments rather than product related factors as well. We can also see considerable opportunity at Hess Corp. (NYSE:HES), though in that case the question is whether it might be better to buy a larger oil and gas company at a discounted earnings multiple rather than to rely on efficiencies from Hess’s spinout.

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