The fund cut its stake in $16 billion market cap hospital company HCA Holdings Inc (NYSE:HCA) by about 50%, but still owned 3.4 million shares of stock at the beginning of April. Net income was down over 30% last quarter compared to the first quarter of 2012 on flat revenue. The sell-side expects that poor performance to reverse over the next year, and with the market not being too optimistic about HCA Holdings Inc (NYSE:HCA) (possibly due to uncertainty again), the trailing and forward P/Es come in at 12 and 10 respectively.
Rock-Tenn Company (NYSE:RKT) rounds out our list of Paulson’s cheap stock picks, as the fund disclosed ownership of 1.4 million shares of the packaging products company in the filing. After nearly doubling in price over the last year, Rock-Tenn Company (NYSE:RKT) still features a trailing earnings multiple of only 13. Revenue was up only slightly in the first quarter of 2013 versus a year earlier (with much better net margins), but the stock is priced low enough that even modest future growth could make it a potential value play. As such we’d be interested in taking a close look at Rock-Tenn.
In addition to Rock-Tenn, Hess also offers a combination of decent recent performance and an attractive valuation (though many oil and gas companies are cheap at this time). We’re also interested in Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX), as while we aren’t fans of management’s acquisitions it is possible that investors have overestimated the amount of shareholder value these deals have put at risk and thus overreacted to the news.
Disclosure: I own no shares of any stocks mentioned in this article.