I am always looking for a good deal, whether that means buying an extra box of Golden Grahams when they're on sale or pouncing on undervalued stocks. The idea that anybody would sell a stock for less than its worth may seem silly, but legendary value investor Ben Graham (no relation to the cereal) tells us, by way of allegory, how we can look out for these situations.
In The Intelligent Investor, Graham introduces readers to a wacky chap named Mr. Market. He pays you house calls on a daily basis, offering 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, offering you premium prices for your holdings. At other times, he'll be inconsolably depressed about the future, and will offer to sell you his wares 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
(out of 5)
|
|
Jinpan International (Nasdaq: JST )
|
(9.8%)
|
(4.4%)
|
*****
|
|
China Security & Surveillance (NYSE: CSR )
|
(9.5%)
|
(48.7%)
|
*****
|
|
Activision Blizzard (Nasdaq: ATVI )
|
(9.1%)
|
(31.3%)
|
*****
|
|
Huaneng Power (NYSE: HNP )
|
(7.6%)
|
(0.3%)
|
*****
|
|
Himax Technologies
|
(5.4%)
|
20.8%
|
*****
|
|
Sigma Designs (Nasdaq: SIGM )
|
(4.9%)
|
8.9%
|
*****
|
|
Cogent
|
(4.0%)
|
(8.0%)
|
*****
|
Data from Motley Fool CAPS as of Sept. 15.
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 further research. I'll get you started with some thoughts on Motley Fool Stock Advisor favorite Activision Blizzard.
Why so blue?
Investors have turned on video games. Not all that long ago, the videogaming industry was considered a defensive bastion against the recession. Now, as the industry watches sales sink, Mr. Market doesn't seem quite so sure.
Former industry giant Electronic Arts (Nasdaq: ERTS ) may be making waves with its controversial stunts, but its recent results have been anything but encouraging. Ditto for original industry bad boy Take-Two Interactive (Nasdaq: TTWO ) , which witnessed a 68% drop in sales.
And while there are high hopes for Activision's Guitar Hero 5, not to mention Viacom's competing The Beatles: Rock Band title, there are some signs that the market may be struggling to swallow the glut of music-based gaming titles.
What the bulls say
Current video game industry sales trends and investor sentiment may be wreaking havoc on Activision's stock price, but members of the CAPS community have stuck by the stock. Nearly 4,600 members have weighed in on the stock and 4,492 have come in on the bullish side.
CAPS member TMFmrquakeroats recently shared some thoughts on Activision, kicking off a thorough review with:
I am very bullish on the video game industry, long-term. I believe ATVI is the cream-of-the-crop of this industry. The recent bear market, which has created a very nice opportunity to buy ATVI at a very low multiple of free cash flow, coupled with the acquisition of Blizzard makes this an optimal time to pick this stock to outperform or put real money on the line for the next 10 years and beyond.
But here's the important question: Do you think the recent drop has created a good buying opportunity? Or will the video game slump continue to pummel Activision? Head over to CAPS and share your thoughts with the 140,000 community members. It's free. Even if you'd prefer to pass on Activision, you can check out a couple of the other stocks listed above or any of the 5,300 stocks that are rated on CAPS.
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