3 More Shares I've Backed for the Rebound

LONDON -- I love buying good companies on bad news. Who doesn't love a bargain? Here are three stocks I picked up after they suffered a short-term shock to their share price. I expect them to prove a solid long-term hold.

BG or not BG?
Woe betide the company that dares admit it won't grow next year, for it will feel the wrath of the stock market. Last November, when oil and gas exploration giant BG Group (LSE: BG  ) admitted it wouldn't grow in 2013, punishment was swift and brutal. Some 20% was instantly sliced off its share price, knocking it from 13.30 pounds to about 10.40 pounds. BG Group had plenty of bad news to report, including the shutdown of its Elgin rig in the North Sea, delayed production at North Sea field Jasmine, a brace of delays in Brazil, an underpowered Egyptian gas plant, and the U.S. shale gas revolution, which hit prices and margins. I've always been a glutton for other people's punishment, and this looked like a great opportunity for me. On Nov. 23, I decided the worst was over and bought at 10.80 pounds.

There has been some good news this year, with BG Group and its consortium partners announcing the start of commercial production on time and within budget at the offshore Sapinhoa field in Brazil. The rising oil price has helped, as have regular takeover rumors. I'm already up 7%, which gives me a comfy cushion against further turbulence. Who cares if BG Group doesn't grow in 2013? I'm setting my sights much further ahead.

Every little bit helps
Stock markets can be cruel masters. A company like Tesco (LSE: TSCO  ) (NASDAQOTH: TSCDY  ) can give them years of faithful service and rewards, but one bad set of results, and they dish out a brutal whipping. Hell hath no fury like an investor disappointed by a retailer's Christmas results, and when Britain's largest supermarket chain posted a disappointing Christmas 2011, its share price plummeted nearly 25%. I popped Tesco into my trolley at 3.22 pounds in November after deciding that Britain's biggest retailer couldn't fluff Christmas two years running, and it didn't, beating Sainsbury and thrashing Morrison. I'm up 11% so far, and with Tesco still trading on a modest price-to-earnings ratio of just more than 11, I'm expecting more to come. I am also banking a 4.5% yield. Yes, there may be horse meat in its hamburgers, but Tesco chief executive Philip Clarke swiftly took that bull by the horns, and it will do zero harm to the long-term investment case. At the rate the British high street is tumbling, Tesco could be all we have left.

Long-distance call
Perhaps it is a little too early to crow about buying Vodafone (LSE: VOD  )   (NASDAQ: VOD  ) , as I only bought it last week. I've been holding Vodafone since August 2009 and have been cheerfully pocketing a 5% yield ever since, with some decent capital growth on top. So when I noticed it had dropped 18% since August, I couldn't resist buying more. Who could turn down a 5.6% yield when you can scarcely get 2% on a best-buy savings account? It's especially tempting coming from a global telecom giant trading on a P/E of 11. True, projected earnings-per-share growth for the next three years hardly looks spectacular at 3%, 4%, and 6%, respectively, but I knew this wasn't a whizzy growth stock. I see it as a solid, long-term dividend machine. That's why I bought now, when it was cheaper than before. The share price might even get a short-term boost if it sells its share of its U.S. joint-venture Verizon Wireless. But my horizons are much longer than that.

Five more to think about
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