5 Superball Stocks

In my recurring Fool column, "Get Ready for the Bounce," we search for future winners in a pile of 52-week losers. But do we really need to sit around for a whole year, waiting for a fallen stock to bounce back?

 Nope. Sometimes stocks fall hard, in far less time than a year. And like a superball dropped from the balcony, the harder they fall, the higher they bounce. Today, we'll look at a few equities that've suffered dramatic drops over the past week. With a little help from the 170,000 members of Motley Fool CAPS, we hope to find an opportunity or two for you:

Stocks

How far from 52-week high?

Recent Price

CAPS Rating
(out of 5)

Telkom Indonesia  (NYSE: TLK  )

(19%)

$35.67

*****

Sonus Networks (Nasdaq: SONS  )

(26%)

$2.79

*****

Spirit AeroSystems (NYSE: SPR  )

(20%)

$19.27

*****

Taseko Mines  (NYSE: TGB  )

(35%)

$4.67

****

Allied Irish Banks  (NYSE: AIB  )

(87%)

$0.83

****

Companies are selected by screening on finviz.com for abrupt 10% or greater price drops over the past week. 52-week high and recent price data provided by finviz.com. CAPS ratings from Motley Fool CAPS.

Five super falls -- one superball
If you were invested in any of these stocks last week, you're significantly poorer today because of it. And yet, if you poll the 170,000 (and counting) investors who make up Motley Fool CAPS, it turns out they think buying these stocks today is a great way to become a very rich Fool indeed. Not a single stock on today's list scores so low as a middling three stars -- each and every one of 'em enjoys strong, four- and five-star investor support. But … which one is the best bet?

CAPS member aordinaryguy is placing all his money on black, and Allied Irish. Reasons he, this is a total binary scenario: "This bank will either get nationalized (and a complete loser) or come back strong and be a multibagger. I'm betting on the too big to fail multibagger scenario…"

All-Star investor DarthMaul09 prefers the harder "currency" play offered at Taseko Mines, warning that: "world currency debasements (primarily the US dollar) will continue, which will again support the rise in commodity prices and stocks. Since the small miners tend to make greater moves than the index, the expected rise will likely give TGB and its peers a lead over the index."

Fellow All-Stars MrEuro and TMFZahrim don't necessarily disagree, but take a more business-centered approach to their investing. Says MrEuro, the reviving airplane market makes Spirit AeroSystems a good bet. Why? Because as a supplier to both the major international aerospace concerns, Spirit "wins when Airbus an/or Boeing (NYSE: BA  ) wins." Meanwhile, TMFZahrim notes that with "over $350 million of cash equivalents in its accounts … virtually no debt, and … $9.5 million of free cash flows in the first half of 2010," Sonus is the safer bet. "Its innovative voice traffic solutions might even make it a takeover target for someone like Cisco Systems."

As for me, though, I've never been a big fan of profitless companies like Sonus, or bankrupt banks, Irish or otherwise. Mining stocks look like a deep dark hole to me, and as for Spirit, I've long decried the valuation on that overblown Boeing 787 play. Instead, I'm going with Door No. 5 this week, and giving Telkom Indonesia a ring. Here's why:

The bull case for Telkom Indonesia
If you've never heard of Telkom Indonesia (or perhaps you know it by the more mellifluous moniker "Perusahaan Perseroan PT Telekomunikasi Indonesia Tbk?"), then now's a great time to find out more about this Motley Fool Income Investor recommendation. TI just finished reporting earnings in which it described strong, double-digit cellphone subscriber growth turbocharged by a triple-digit, 155% rise in Internet broadband customers. Operating income for the quarter actually slipped a bit as operating costs paced revenue gains, but even so, the stock looks to me like the best value to be found among the five Fool faves named up above -- and I'm not the only investor thinking so.

CAPS member RTFM2009 likes the fact that TI "has a monopoly in Indonisia," a fact that SmoothHughes believes gives the company a "nice moat in a fast growing economy."

CAPS All-Star Caligiuri has praised TI's "high ROE and ROA," and just about anybody you ask is simply in love with the stock's terrifically generous 6.3% dividend.

And that's only the start of the good news. TI also sells for an entirely reasonable 13.7 times trailing earnings, which is much cheaper than, say, Verizon (NYSE: VZ  ) costs back here at home. (TI's dividend is bigger, too.) Best of all, TI's cash flow statement confirms the quality of its earnings, showing free cash flow that outpaces reported GAAP profits by more than 10%.

Time to chime in
With a strong dividend payout funded by even stronger free cash flow, a reasonable P/E, and a debt load that's so miniscule as to hardly bear mention, Telkom Indonesia seems to me to possess just about everything an investor could want in a telecom stock -- and more.

That said, Foolish minds can certainly differ on the stock, and perhaps you disagree? If you think one of the other four stocks on today's list deserves a second look, and offers a better deal than TI -- tell us why. Right here, on Motley Fool CAPS.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 675 out of more than 170,000 members. The Fool has a disclosure policy.

Telekom Indonesia is a Motley Fool Global Gains pick. Spirit AeroSystems Holdings is a Motley Fool Hidden Gems recommendation. Telekom Indonesia is a Motley Fool Income Investor pick. The Fool owns shares of Telekom Indonesia.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.


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