3 Stocks Making a Comeback

With all the volatility in the markets today, there's no shortage of market seers trying to call a bottom. Even Ben Bernanke has weighed in and called a bottom not once, but twice. And with the Federal Reserve acknowledging that what many are calling a recovery has slowed, some economists and market analysts argue that the worst is yet to come.

Investors should consider buying stocks after a big decline, when pessimism has unduly beaten good companies down to great prices. That's why we here at the Fool -- and 165,000-plus investors like us -- look to the Motley Fool CAPS community to help sniff out the real opportunities from languishing companies driven by speculation.

A real bottom or another leg down?
Of course, there's no foolproof method for timing a market bottom. But CAPS has a great balance of both quantitative and qualitative resources available on 5,400 stocks, and even a nifty stock-screening tool to help investors quickly zero in on potential investment opportunities.

I've used the CAPS screener to filter out $100 million-plus companies that have seen their stock price appreciate by at least 30% in the past 52 weeks even while they sit at least 40% below their 52-week high.

Company

CAPS Rating
(out of 5)

52-Week
Price Change

% Below 52-week High

Manitowoc (NYSE: MTW  )

*****

39.2%

43.2%

Cytori Therapeutics (Nasdaq: CYTX  )

**

49.8%

50%

Wave Systems (Nasdaq: WAVX  )

*

168.2%

51.4%

Source: Motley Fool CAPS.

Cytori Therapeutics has been doing a bang-up job lately, rapidly expanding the adoption of its Celution and StemSource regenerative medicine products. The momentum in product sales was even strong enough to lead to a reported 64% second-quarter revenue increase. And PC security company Wave Systems has followed suit with a 34% second-quarter sales improvement on stronger software sales and strengthening OEM partner relationships. Despite these performances, CAPS members have a much more bullish outlook for crane and food service equipment maker Manitowoc, with its top five-star CAPS rating.

The bottom case
CAPS members cite several reasons why Manitowoc's business may be looking nowhere but up today. Clawing its way back from the recession sucker punch, the company recently broke its streak of losing quarters and topped analysts' second-quarter expectations on an adjusted basis. Some investors believe Manitowoc's competitive position in its business segments is a big reason for its resilience and as such see long-term potential in the stock.

In contrast to Illinois Tool Works' (NYSE: ITW  ) food equipment revenue dip, Manitowoc generated an 11% increase in food services sales with higher operating margins and is seeing growing demand in and outside of North America that it expects will significantly contribute to growth. And despite the weakness its crane segment is seeing in North America, emerging markets are improving, with opportunities in regions such as Asia and Latin America that the company expects to translate into improving crane revenues in the second half of this year. Other companies see big opportunities, too, as Terex (NYSE: TEX  ) recently inked a deal for a stake in a Chinese crane maker, and heavy equipment maker Caterpillar (NYSE: CAT  ) has been investing heavily to capture share of the market in China as well. Despite the number of big players involved, CAPS members see plenty of room for Manitowoc to benefit as emerging economies build up their infrastructure. 

Or further to fall?
Even though Manitowoc may look spry, the current economic environment is forcing its food services segment to carry more of the weight of the overall business as its crane segment suffers. The crane segment cranked out 31% less revenue than last year, and tight credit markets have hurt its backlog, while rental rates show persistent softness. Equipment maker Deere (NYSE: DE  ) has painted a bleak picture, recently calling demand in its construction and forestry equipment segment very depressed, with U.S. builders lacking confidence to buy equipment. Considering the troubling environment coupled with the large debt load on Manitowoc's balance sheet -- which was boosted through its recent purchase of Enodis -- some investors are concerned about risks facing its future performance.   

What's your call?
Overall, about 98% of the 1,816 CAPS members rating Manitowoc are bullish and see it outperforming the broader market. For my part, I agree with that majority and think Manitowoc has the legs to make it through this tough patch and perform well for investors in the long run, even though the near term may be volatile.

But what ultimately counts is your own opinion; CAPS is just there to help you form it. The best part is that the Motley Fool CAPS database is all free, and you can even add your own insight on any of the 5,400 stocks that our 165,000-plus members have covered.

The Motley Fool Stock Advisor service looks for companies with strong management poised to beat the market over the long haul. To see all the stocks that have helped Tom and David Gardner beat the market by 60 points on average, take a free 30-day trial.

Since getting some new sneakers, Fool contributor Dave Mock is showing a little more spring in his step, too. He owns no shares of companies mentioned here. The Fool has established a bear put spread position on Caterpillar. The Fool's disclosure policy sometimes gets wound too tight and needs a deep-tissue massage.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1281768, ~/Articles/ArticleHandler.aspx, 12/22/2014 2:56:14 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement