Calumet Specialty Products Partners, L.P (NASDAQ:CLMT), the specialty hydrocarbon producer, is Tepper’s third favorite small-cap, sitting at 30th place in terms of his fund’s total 13F portfolio. An MLP, Calumet currently sports a projected dividend yield near 8% at a +60% payout of earnings, which have shrank by nearly 19% a year–on average–over the past half-decade. The sell-side expects massive EPS acceleration over the next five years, though, with early forecasts expecting a 16-17% annual growth through 2017. It appears that this growth should be partially steered by lower feedstock costs. Shares have already returned 46.9% over the past 12 months, but still trade at discounted PEG (0.56) and forward P/E (8.4x) multiples.
Gaming and casino company Boyd Gaming Corporation (NYSE:BYD) is just the fourth small-cap stock in Tepper’s top 45 holdings. The hedge fund manager held a little over $14 million worth of the stock at the end of last quarter, but has seen a sub-par return on his investment over the past year; shares of BYD have essentially remained flat. The bullish argument for Boyd seems to lie in its multi-jurisdictional operations, which stretch across Nevada (Las Vegas), New Jersey (Atlantic City), Illinois, Indiana, Louisiana and Mississippi. Partially due to tax-related worries, Boyd trades at undervalued metrics across the board, and after finishing 2011 with a loss of one cent per share, analysts expect the company to reach a 22-cent EPS by the end of 2013.
Last but certainly not least, JetBlue Airways Corporation (NASDAQ:JBLU) is Appaloosa’s fifth largest small-cap holding, sitting 49th of the hedge fund’s 54 stocks listed on its last 13F filing. JetBlue is another airline play in Tepper’s portfolio, and it’s worth noting that it the company said it was “not interested” in an American Airlines merger last August. Dave Barger, JetBlue’s CEO, has mentioned that it is focused on “independence” in the face of industry-wide consolidation. Interestingly, the sell-side is extraordinarily optimistic on JetBlue’s future, forecasting EPS growth of 28-29% a year over the next half-decade. At a PEG below 0.5, it appears that the markets aren’t valuing the stock’s potential properly.
Judging by David Tepper and Appaloosa Management’s top five small-cap stock picks, the hedge fund has uncovered a host of high-growth plays, each also offering an attractive valuation. To see the remainder of Tepper’s portfolio, check it out on Insider Monkey and for more related coverage, continue reading here:
David Tepper’s 5 High-Upside Picks
‘Tepperize’ Your Portfolio in 2013
Tepper is Buying AIG and What Else?
Disclosure: I hold no positions in any of the stocks mentioned in this article
