Qualcomm, Inc. (QCOM), Aflac, Dollar General: Ken Griffin’s Picks That Can Pop

The discount retailer Dollar General Corp. (NYSE:DG) recently posted 3Q results of $0.63, well above $0.50 for 3Q 2011. The beat was driven by same store stores growth of 4%, and 10% higher sales on a year over year basis. Dollar General was also recently added to the S&P 500, opening up the tradability and potential investor pool for the company.

We believe that even as the economy shows signs of strengthening, there will continue to be strong demand for Dollar General’s consumer staple and discount products. The retailer trades as one of the cheapest in the industry at 16x trailing earnings and only 13x forward earnings.

When its valuation is coupled with its aggressive expansion plans, Dollar General looks like a superb investment. The sell-side expects a 17% long-term EPS growth rate (annually). Trading at a PEG of 0.9, we see the upside to Dollar General outpacing its major peers Family Dollar and Dollar Tree, while also providing investors limited volatility with a beta of only 0.1. Dollar General has billionaire Steven Cohen of SAC Capital as one of its top investors of late (check out Steven Cohen’s best picks).

EOG Resources, Inc. (NYSE:EOG) is turning toward unconventional liquids to drive future growth, hoping to limit exposure to the gas market, including the transition to horizontal well oil assets from deepwater or Canadian oil sands. The oil and gas company is targeting 2012 production growth of 11%, compared to 9% growth in 2011. Sticking to its initiative to move toward a more liquid-based portfolio, EOG is targeting 40% oil growth by the end of this year.

We believe that investors are over-discounting the impact that this higher margin oil production will have on earnings, and so the energy company trades at only 20x forward EPS, while its long-term expected earnings growth rate is upwards of 22%. T. Boone Pickens has over 8% of his 13F portfolio invested in the energy company (see T. Boone Pickens’ newest picks).

In short, we believe that Citadel has well positioned its portfolio with a number of deep-discount picks that are poised for large upside moves. The likes of Qualcomm, Aflac and GNC provide investors this upside potential while also yielding income from dividends. Now, Dollar General and EOG do not pay any income via dividends, but do offer some of the better long-term growth prospects due to expansionary expectations. To continue reading about Ken Griffin’s other plays, check out some recent coverage:

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