I am always looking for a good deal, whether that means buying an extra box of Frosted Flakes when they're on sale or pouncing on undervalued stocks. The idea that anybody would sell a stock for less than it's worth may seem silly, but legendary value investor Ben Graham tells us, by way of allegory, how we can look out for these situations.
In The Intelligent Investor, Graham introduces readers to a wacky guy named Mr. Market. Mr. Market's game is to pay you house calls on a daily basis to offer to sell you interests in businesses he owns or to buy from you interests in businesses you own. Sometimes Mr. Market will show up at your door very excited and offer you premium prices for your holdings, while at other times he'll be inconsolably depressed about the future and will offer to sell you what he has for as low as pennies on the dollar.
To find some of the stocks that Mr. Market is depressed about, I've turned once again to The Motley Fool's CAPS investor community. Each of the companies below had been given a five-star rating (the highest) by our community of investors just 30 days ago:
|
Stock
|
30-Day Return
|
One-Year Return
|
Current CAPS Rating
|
|
Yamana Gold (NYSE: AUY)
|
(32.5%)
|
4.3%
|
*****
|
|
Petrobras (NYSE: PBR)
|
(23.6%)
|
61.0%
|
*****
|
|
Southern Copper (NYSE: PCU)
|
(25.6%)
|
(19.5%)
|
*****
|
|
Nintendo (OTC: NTDOY.PK)
|
(13.5%)
|
7.6%
|
*****
|
|
BHP Billiton
|
(14.3%)
|
9.4%
|
*****
|
|
Halliburton (NYSE: HAL)
|
(14.1%)
|
27.7%
|
****
|
|
ConocoPhillips (NYSE: COP)
|
(12.6%)
|
3.3%
|
****
|
Data from Motley Fool CAPS as of Aug. 5, 2008.
As the table shows, these stocks are all still very well-regarded by the CAPS community, despite their underperformance over the past month. While these are not formal recommendations, they could be a great place to kick off some further research. I'll even get you started with some thoughts on Motley Fool Stock Advisor stock recommendation Nintendo.
Why so blue?
I can tell you why Nintendo wasn't down: its results for the June-ended quarter. Wii sales have been nothing less than off the hook, jumping more than 50% from last year, and helping to counteract the leveling off of Nintendo DS sales. Total revenue and net income were up 24% and 34%, respectively.
The absence of a boost to the company's guidance, though, was a bit disappointing for some analysts and investors. At the same time, Sony and Microsoft (Nasdaq: MSFT) are trying to turn up the heat in the console war by cutting the prices on their video game systems. To date, the Wii has flummoxed both competitors, but it's tough to discount the allure of lower prices.
What the bulls say
Should you be following the investors that are heading for the exits? CAPS members think not. A whopping 1,768 of the 1,803 CAPS members who have rated Nintendo have called it an outperformer. TMFBreakerJava gave his rallying cry in early July:
The video game up cycle is now on with a vengeance and the Wii has emerged as the hottest of the new platforms. In spite of its lack of HD technology, Wii has the games and the innovative interactions that families want. They have delivered a steady series of hits for their new platform. Expect Nintendo to continue to outperform.
So do you think the recent drop has created a good buying opportunity? Or is there more downside ahead? Let the community know what you think -- head over to CAPS and share your thoughts with the 110,000-plus members. Even if you'd prefer to pass on Nintendo, you can check out a couple of the other stocks listed above or any of the 5,500 stocks that are rated on CAPS.
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