5 Stocks to Sell Now According to Billionaire David Tepper

4. APA Corporation (NASDAQ:APA)

Number of Hedge Fund Holders: 36

APA Corporation (NASDAQ:NASDAQ:APA) is the holding company for the hydrocarbon exploration firm Apache Corporation. Appaloosa Management added the company to its portfolio in Q1 2021 and dumped the entirety of the stock in the second quarter of 2022.

APA Corporation (NASDAQ:NASDAQ:APA) generated a free cash flow of $814 million in the June quarter, and like always, it was adamant about returning massive amounts to shareholders. On average, the company pays approximately $40 million in dividends per quarter. In Q2 2022, the firm repurchased $290 million worth of shares, most of which were bought back in July. Furthermore, the company reduced its debt in the quarter by $600 million.

On August 12, Citi analyst Scott Gruber upgraded APA Corporation (NASDAQ:NASDAQ:APA)’s shares to Buy from Neutral and raised the price target to $58 from $40. The analyst noted that the company offers an under-appreciated growth story. He added that the company’s FCF over the next three years at strip stands at 2%, while the sector on average declines by 20%.

Here is what Oakmark Funds had to say about APA Corporation (NASDAQ:APA) in its Q1 2022 investor letter:

“Our oil holding, APA Corporation (NASDAQ:APA) (+54%) was one of our top contributors in the quarter as oil prices rallied due to tight supplies, which were then exacerbated by the Russian invasion of Ukraine. Although their share prices have increased considerably, both companies still look quite undervalued even using longer term oil prices in the $65-70 dollar range. Meanwhile, if times are good over the next couple of years, we expect these companies to return significant percentages of their market caps to shareholders.”