3 Stocks I Bought During the Panic

At The Motley Fool, we're all about investors writing for investors, so I'm not just a commentator spouting off my opinions on the market while I sit on my hands. I'm an investor constantly on the lookout for opportunities to put my own money to work in the market.

It shouldn’t be all that surprising, then, that over the past week I was pretty excited to pick up shares of some stocks that I've had my eye on. While The Fool's disclosure policy prevents me from talking about some of the buys I've made this week, here’s a look at a few of the stocks that I've picked up since things started to get crazy.

Teva Pharmaceutical (Nasdaq: TEVA  )
While many big pharmaceutical companies, like Pfizer (NYSE: PFE  ) and Merck (NYSE: MRK  ) , have been facing major concerns of late as they await the expiration of patents on some of their largest revenue generators, Teva finds itself in a very different situation. As the leading generic-drug maker, Teva actually benefits from the expiration of big pharma patents as it formulates cheaper alternatives.

The company is in a particularly good position as many different stakeholders in the U.S. health-care system look to lower costs. As my fellow Fool Jim Mueller put it a year ago in his 11 O'Clock Stock pitch: "[Teva] takes advantage of governments', insurers', and employers' desire to rein in some of the rising costs of health care by offering cheaper alternatives to many prescription drugs."

Investors are no fools (lowercase "f"), though, and Teva has traded at a premium valuation to the patent-focused drugmakers. When I took a look at the stock's valuation back in early June, I wasn't overly impressed, even though I liked the returns expectations enough to buy a small position. However, the stock's price has fallen more than 20% since then, and, all else equal, when the purchase price falls, the expected returns rise. I'm not convinced that the prospects for the business have changed drastically since June, so I was excited to be able to buy more of this quality name at a lower price.

Susquehanna Bancshares (Nasdaq: SUSQ  )
Regular readers of mine know that while I like to load up most of my portfolio with quality businesses at attractive prices, I also have a penchant for the ultracheap stocks of companies that may not be the cream of the crop. In my most recent dig through the bargain bin, Susquehanna popped up on my radar.

At the time, I said I believed that Susquehanna may just be "a not-so-bad bank at a very-bad-bank price." My view hasn't changed. Susquehanna may not have the same kind of brand or global reach as, say, Citigroup (NYSE: C  ) , but it also doesn't have the same kind of could-be-a-nuclear-bomb balance sheet that Citi has.

Like the other beaten-down bargain stocks that I own, Susquehanna is a small position, but it's one that I was glad to be able to grab at a bargain-basement price.

Waste Management (NYSE: WM  )
Like Teva, Waste Management fits my general mold of buying quality companies when I can snap them up at attractive prices. The company is a nationwide leader in waste collection and recycling, a well-run giant in a stable industry that produces an attractive amount of cash flow and pays a nice dividend. As an added bonus, as my fellow Fool Alyce Lomax has pointed out, the company recognizes the importance of helping create a greener future.

The catch for me, however, was that I wasn't crazy about the price. Last month I wrote that I wasn't terribly impressed with my returns estimates for the stock: "As for me, it simply means that I'm going to stay on the sidelines, keep my eye on the stock, and hope that there's an opportunity to buy it at a lower price."

My patience paid off and I got that better price. Between the day I wrote that and this past Monday, Waste Management's stock fell 24%, which brought the stock's expected returns right into my wheelhouse. Not being someone who makes a habit of looking gift horses in their mouths, I jumped on the opportunity to buy.

Be ready for the right opportunities
As I wrote earlier this week, when stocks start swooning like they've done over the past week, you can only intelligently take advantage of the lower prices if you already have a collection of stocks on your radar that you've been following and are ready to pounce on. To put the stocks above on your watchlist, click the "+" next to the ticker. Don't have a watchlist yet? Click here to set one up for free.

The Motley Fool owns shares of Teva Pharmaceutical Industries, Citigroup, and Waste Management. Motley Fool newsletter services have recommended buying shares of Teva Pharmaceutical Industries, Pfizer, and Waste Management. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Fool contributor Matt Koppenheffer owns shares of Susquehanna Bancshares, Waste Management, and Teva Pharmaceutical Industries, but does not have a financial interest in any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool’s disclosure policy prefers dividends over a sharp stick in the eye.


Read/Post Comments (15) | Recommend This Article (51)

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.

  • Report this Comment On August 12, 2011, at 8:28 PM, johnhenr wrote:

    Did the same thing. Bought some shares of TEVA and added to my position in WM. Don't you just love this crazy market!

  • Report this Comment On August 12, 2011, at 8:29 PM, Greygoose1 wrote:

    I agree WM is attractive at these levels. I realize their earnings were not up to snuff, but I for one see no apparent reason for the down turn..

  • Report this Comment On August 12, 2011, at 11:52 PM, Pat4Ra wrote:

    Matt,

    Don't you think Republic (RSG) is a better buy than WM as its price is down too? RSG is growing at a better rate then WM.

  • Report this Comment On August 13, 2011, at 1:26 AM, ayaghsizian wrote:

    I didn't copy you but I have read your articles in the past so maybe it is no coincidence that I bought Teva and WM. I was still surprised to see that we thought alike.

  • Report this Comment On August 13, 2011, at 6:13 AM, 2Think4Profit wrote:

    For me it was small lots of JNJ, PG, ABT, WMT and EXC, along with a significant position add to CSCO in the mid $13 range. Regardless of the momentary "relief" that seems to have set in I'm thinking we'll have another dip opportunity or two to buy in. Similar to Matt, aside from CSCO mine were small adds. I think it's wise to hang on to some cash and buy in carefully.

  • Report this Comment On August 13, 2011, at 1:34 PM, rchWI wrote:

    I placed an order last Monday to sell VE at the close of business and to buy Motley Fool Independence Fund with the proceeds. I bought VE because of it basic business of water management and waste management. I thought there would be a continuing need for as far as I could see for water, but did not consider the impact of the French franc's problems on the company. The lesson learned was even though there is a need for a company's products other considerations can impact the price of a stock.

  • Report this Comment On August 13, 2011, at 2:12 PM, addikt06 wrote:

    The companies are fine but you are buying at the wrong time. The recent drop in market is not temporary, it is only the beginning. There is big money being injected into the market in hopes of avoiding this (or if you want in nicer terms, "buying low") but it's all fake.

  • Report this Comment On August 13, 2011, at 2:44 PM, workingagain wrote:

    Did TEVA skip paying dividend the last quarter? If so, what was the reason? Is that a sign of problem? Thanks.

  • Report this Comment On August 13, 2011, at 3:12 PM, earthmabus wrote:

    I thought WM's price looked like it was too good to pass up last week so I ended up opening a position!

  • Report this Comment On August 13, 2011, at 3:44 PM, Chontichajim wrote:

    WM looks good at this price. I would not criticize anyone who thought it was time to pick up a bank stock now, but I think they can wait another year or more until interest rates are allowed to rise. TEVA is not bad on paper but you have two built in negatives because of its association with Israel. The first is rather common 20% income tax witheld from dividends while the other is that Israeli stocks fell over both bad news in Europe and news on Arab uprisings. Not sure how they will react to new landmines being laid on the Syrian border, but I got fed up with Israeli Cellular stocks going down over local politics.

  • Report this Comment On August 14, 2011, at 10:29 PM, Midas5280 wrote:

    My concern re TEVA is that its stated goodwill could be artifically inflating the company's value to a significant degree.

  • Report this Comment On August 15, 2011, at 11:48 AM, TMFKopp wrote:

    @Pat4Ra

    What's the pitch for RSG? I haven't looked at it terribly closely yet.

    @workingagain

    Do you have a link for that?

    Matt

  • Report this Comment On August 15, 2011, at 10:14 PM, UFOFred wrote:

    Hi All,

    I too took advantage of the "sale" last week via limit orders. Anticipating the selloff, I put in a small limit order for Intel @ 21.50 and a bigger one @ 20. The first executed Aug 3, and the 2nd on the 9th. The low price ended up being 19.52.

    I also put in a limit on Waste Mgmt for 29. The low was 27.75.

    I used shear guesswork in setting these prices. Would technical analysis have helped? If so, how to do without investing too much time?

    Since I am still have a day job, I cannot watch the market while it is open. Limit orders are usually the way I trade.

  • Report this Comment On August 17, 2011, at 1:37 PM, TMFKopp wrote:

    @UFOFred

    Sure there might be someone willing to share some thoughts on technical analysis, but it's generally not considered a Foolish way to invest.

    http://www.fool.com/investing/value/2010/04/30/technical-ana...

    Matt

  • Report this Comment On August 17, 2011, at 1:56 PM, DaveGruska wrote:

    I keep looking at WM, but the LT debt load, and very high payout ratio have kept me on the sidelines.

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