Though value investors have been some of the most successful investors out there, finding good stocks at bargain prices is far from easy. Though markets aren't as efficient as some university professors may lead you to believe, they generally do a pretty good job pricing stocks. So while there are good deals out there, you're going to have to break a bit of a mental sweat if you want to make sure that you're investing in the stock equivalent of Johnny Depp, not Kato Kaelin.
Fortunately for us, in the search for stock market values, we have the 120,000-plus members of The Motley Fool's CAPS community voting on which stocks are true stars and which are just posers. To gather some ideas, I've dug up a handful of companies valued at less than twice their book value -- a measure often used by value investors.
|
Company |
Book Value Multiple |
1-Year Stock Performance |
CAPS Rating (5 max) |
|---|---|---|---|
|
Anadigics |
0.4 |
(90%) |
**** |
|
Blockbuster |
0.4 |
(79%) |
* |
|
Advanced Micro Devices |
1.3 |
(77%) |
** |
|
Apache |
1.4 |
(25%) |
***** |
|
Yahoo! |
1.5 |
(61%) |
** |
Source: Capital IQ, a division of Standard & Poor's, Yahoo! Finance, and CAPS as of Oct. 24.
As you can see, though these stocks all carry value-like multiples, the CAPS community obviously doesn't think that all are worthy of your investment dollars.
No twinkle in these stars
At first it was just homebuilders taking a beating, then financial companies joined the party, but within just the past month almost the entire market is ablaze as investors run screaming from just about every stock out there. But even as many stocks start falling into value territory, CAPS members are still being picky about which stocks they endorse.
AMD, Yahoo!, and Blockbuster are all trading at value-type multiples, but their CAPS ratings suggest that you may be better off trying to declaw a hungry wolverine than buy shares. All three companies were struggling even before the market took its pitch in to the abyss, and now that pretty much everything is trading significantly down, it seems even less appealing to jump on a turnaround play.
CAPS All-Star rayandfran gave Yahoo! a thumbs-down earlier in the month, calling it a "broken stock, and management is not acting in best interests of the company. Jerry Yang may have been gifted at developing the search idea, but not at running a company." Meanwhile, fellow All-Star and Yahoo! bear ikkyu2 hearkened back to the offer that Microsoft
A five-star is born!
Anadigics has been clobbered worse than any of the other stocks on this week's list, and it certainly wasn't helped by its recently announced third-quarter loss and projected fourth-quarter loss. CAPS members, however, think that there may be a good opportunity hiding out there and have given this little fish four stars.
And while Anadigics and its four-star rating may be worth checking out, that stock takes a backseat to this week's favorite -- Apache. As an independent oil and gas company, Apache has fallen right along with oil majors like ExxonMobil and Chevron
Many CAPS members, though, are convinced that the decline in energy has been overdone and that the world's growing need for energy will eventually win out. CAPS All-Star aracer put his thumb up on Apache early in October and wrote:
Call the police. I am stealing this stock. Trading near 52 week low, Apache's key statistics show enhanced performance inversely proportional to its [price per share] since its June high. ... As an energy play in oil and gas (reserves located mostly in N America), this company is perfectly positioned to prosper from world and U.S. growing energy demands.
Make your vote count!
Do you agree that Apache could be America's next top value stock? Click over to CAPS and let the rest of the community know what you think. And while you're there, you can log your vote for the other stocks that you think should be in the running.
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