ABT, VLO, TGT, MET, AEP: 5 Industry-Driven Bets This Billionaire is Banking On

Englander increased his position in Metlife Inc (NYSE:MET) by almost 60% last quarter, and is now the fund manager’s 25th largest 13F holding. This insurer also pays a 2.2% dividend yield. An improving labor market will help boost life insurance sales, though stronger presence in its international segment will be the key driver.

Metlife trades at a P/B of only 0.5x, and is valued in line with other major insurance peers on a P/E basis at 15x. We think Metlife’s PEG of 0.5 and long-term EPS growth rate of 12% are two factors that differentiate the company from its competitors; the latter should be helped by group sales in its life insurance division, as employment gains fuel demand.

Englander increased his stake of American Electric Power Company, Inc. (NYSE:AEP) by over 1,000% last quarter. This utility company also pays the highest dividend yield of our five stocks mentioned with a yield of 4.3%. American Electric expects a decline in operating earnings this year, despite a winter that looks to be cooler than last year. Over the longer term, American Electric expects to see growth from competitive initiatives in its Ohio market segment.

American Electric trades at the low end of the industry at 13x earnings, and continues to show solid cash flow growth. The utility company pays an annual dividend that amounts to nearly $1 billion, and it was able to generate $1.2 billion in cash from operations last quarter alone.

To recap: we believe Israel Englander has made solid industry-specific bets that also provide downside protection with robust dividend yields. Abbott is one of the top performing pharma stocks in the industry and should manage to grow nicely following its spin off. Valero is a solid bet on the rebounding oil/gas industry that should see solid distillate demand going forward. Target, meanwhile, is a leading retailer that has managed to sport solid growth despite a weak economy, and its consumable food offerings give investors reason to be cheery. Metlife will be helped by a rise in general population over the long term, and American Electric is a niche utility company with growth opportunities in regional markets.