Citigroup Inc. (C), The Goodyear Tire & Rubber Company (GT) Among Billionaire David Tepper’s Long Term Stock Picks

Page 2 of 2

United Continental Holdings Inc (NYSE:UAL) is another of Tepper’s long term picks. Airlines have generally done well in the last year on optimism that US Airways Group, Inc. (NYSE:LCC)’s merger with American Airlines will increase industry consolidation and pricing power. With the sell-side expecting good earnings per share numbers for next year, but investors generally shying away from legacy carriers due to their history of bankruptcy, United Continental Holdings Inc (NYSE:UAL) is also supposedly cheap at a forward P/E of 16 and a five-year PEG ratio well below 1. We’d be interested in considering it alongside other large airlines.

US Airways Group, Inc. (NYSE:LCC) itself also happens to have been a large holding for the fund both last quarter and in Q2 2011. Again, in terms of expected earnings for 2014, the stock is trading at an attractive price although investors would have to have some degree of confidence in Street forecasts. In addition, while US Airways Group, Inc. (NYSE:LCC) does stand to benefit from increased market share on specific routes following its deal with American, the merger will prove to be a complicated process which will carry quite a bit of integration risk. Federal regulators may also look for concessions from the company in exchange for approving the deal.

Appaloosa reported a position of 6.3 million shares in Bank of America Corp (NYSE:BAC) last quarter, making it- another recovering megabank- an additional long term stock pick. While it, like Citi, trades at a discount to the book value of its equity (the P/B ratio is 0.7), the forward earnings multiple is 10. In absolute terms that might be considered low, but it is not particularly low for a large bank and in addition does depend on an even greater degree of improvement on the bottom line than its peer.

Disclosure: I own no shares of any stocks mentioned in this article.

Page 2 of 2