Agrium, Chevron, and More: Billionaire Richard Chilton’s Cheap Stock Picks

The fund owned about 680,000 shares of oil major Chevron Corporation (NYSE:CVX). Oil majors are generally trading at low prices, and Chevron is no exception at 9 times earnings (whether we consider trailing earnings or analyst consensus for 2013). Chevron also pays a 3.4% dividend yield at current prices and dividend levels. However, the oil majors are cheap in part because they have been struggling in recent quarters and the company is no exception here as well. Fellow billionaire Stanley Druckenmiller’s Duquesne Capital initiated a position of about 760,000 shares during the third quarter (check out Druckenmiller’s favorite stocks). We’re interested in Chevron, but we might prefer investing in Exxon Mobil or BP.

Oil and gas equipment and services company National-Oilwell Varco, Inc. (NYSE:NOV) was another cheap Chilton pick as the fund bought nearly all of its 900,000 shares between July and September. National Oilwell Varco’s revenues have been up strongly, and even its net income grew at a double digit rate between Q3 2011 and last quarter. Still, the stock trades at 12 times trailing earnings with analysts expecting considerable growth on the bottom line next year and beyond. It looks like a good value stock to us.

Chilton and his team also increased their stake in Freeport-McMoRan Copper & Gold, Inc. (NYSE:FCX) by 75% to a total of 1.8 million shares. As with most of the other stocks on this list, Freeport McMoRan experienced a decline in revenue and earnings in its most recent quarter compared to the same period in the previous year. It’s also tied closely to the overall economy, with a beta of 2.3, as copper is something of a barometer for macro conditions. The trailing P/E multiple is 12, with analysts expecting strong earnings growth next year (their estimates imply a forward P/E of 8). It’s a good way to play strong global growth, particularly if an investor is bullish on China, but would otherwise be fairly risky.