I'm always looking for a good deal, whether that means buying an extra box of Cap'n Crunch when they're on sale or pouncing on undervalued stocks. The idea that anybody would sell a stock for less than it's worth may seem silly, but legendary value investor Ben Graham tells us, by way of allegory, how we can look out for these situations.
In The Intelligent Investor, Graham introduces readers to a wacky guy named Mr. Market. Mr. Market's game is to pay 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, offering to sell you what he has for as low as pennies on the dollar.
So, 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
|
|
Sterlite Industries India (:SLT)
|
(27.5%)
|
NA
|
*****
|
|
Dawson
Geophysical (:DWSN)
|
(24.2%)
|
30.8%
|
*****
|
|
ICICI Bank (NYSE:IBN)
|
(21.9%)
|
27.4%
|
****
|
|
OYO Geophysical (NASDAQ:OYOG)
|
(19%)
|
(22.8%)
|
*****
|
|
optionsXpress Holdings (NASDAQ:OXPS)
|
(18.5%)
|
5.2%
|
*****
|
|
NYSE Euronext (NYSE:NYX)
|
(17.6%)
|
(21.5%)
|
****
|
|
CNOOC (NYSE:CEO)
|
(17.5%)
|
85.6%
|
*****
|
Data from Motley Fool CAPS and Yahoo! Finance as of Feb. 12. NA = not applicable.
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 some further research. I'll even get you started with some thoughts on Motley Fool Hidden Gems recommendation Dawson Geophysical.
Diving Dawson
I can't help but shake my head sometimes at the way stocks are given up on and left for dead after missing Wall Street's expectations for a single quarter. I'm glad we aren't all judged that harshly.
Dawson's quarter ended March 2007 beat expectations by $0.03 per share. The company followed up by leaping over two subsequent quarters of expectations, beating by $0.20 and $0.11 per share, respectively. Investors were overjoyed, but then came the announcement of the quarter ended in December. An $0.08-per-share miss in the company's most seasonally challenging quarter had investors shaving almost 15% off the stock's price.
Is all lost? I think not. Dawson has been so successful over the past few years because surging oil prices have increased demand for the seismic services it provides. Even if the company's off its highs, oil prices have remained elevated, and worldwide demand remains strong.
The company's big fan base on CAPS includes more than 500 of the service's top players. One of these All-Stars, saunafool, jumped on the Dawson train back in January 2007, writing: "Domestic natural gas drilling will continue at full pace to keep up with demand as [liquefied natural gas] tanker facilities are delayed by local groups saying NIMBY. Domestic oil drilling will continue as long as oil stays above $30/bbl."
Do you think the recent drop has created a good buying opportunity? Or is there more downside ahead? Let the community know what you think -- head over to CAPS and share your thoughts with the other 83,000-plus players currently part of the community. Even if you'd prefer to pass on Dawson, you can check out a couple of the other stocks listed above or any of the 5,000 stocks that are rated on CAPS.
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