Joe Magyer is a man on a mission. The advisor of Motley Fool Inside Value buys two-day-old bread because it's even cheaper than the day-old variety, he checks other people's couches for loose change, and he has made a Foolish living as a value hound, finding bargains in the market. Today, he shares two outstanding companies that aren't quite cheap enough for him to buy, plus a universally unloved carmaker that is screaming value. For your investing convenience, you can now create your own version of My Watchlist, free and easy from the Fool -- just go to www.MyWatchlist.com, or click on one of the links at the end of the article.
Two loved stocks
Everything seems to be going well for Google (Nasdaq: GOOG ) these days, and that's driving Joe crazy. The company reported another great quarter. The change at the top does a better job of aligning the leadership team's skills with their roles and slays the dreaded three-headed monster that had been in place. And more than 300,000 Android devices are being activated every day.
"The so-called easy money is long gone," says Joe, who made Google an Inside Value recommendation last July and now has it as a hold following a 25% run-up. "But I think this will be a solid performer over the next five years. I anticipate a boost coming from mobile search, and Google's always going to be developing new revenue avenues, but I'd like shares to be cheaper before I'd jump in again."
Joe sees eBay (Nasdaq: EBAY ) in a similar light. The company has become the textbook example of the network effect: buyers flock to the auction site to get products on the cheap, so sellers go there because that's where the buyers are, and in turn, more items on sale bring more buyers. Unfortunately, this part of the business is pretty mature, and Joe doesn't expect much growth there. He is more optimistic on the other half of the company: the Paypal side.
"More people have Paypal accounts than American Express or Discover," Joe says, "and it's becoming more widely accepted every day. As more merchants accept it, more people will use it, which will lead to ... well, the network effect again." Additionally, eBay is getting aggressive with Paypal on mobile, meaning that shoppers can concentrate on driving and shopping only without having to pull out their credit cards at the same time.
"Unfortunately, we're not the only ones who have noticed the potential growth for Paypal," says Joe, almost despondently. He's hoping for a pullback.
And one that's pretty much deplored
Joe's final offering doesn't run the risk of being overly loved by the media, investors, or really anyone.
"Everyone seems to hate General Motors (NYSE: GM ) , and that's what makes it beautiful to me," says Joe of a company that he has made a recommendation and that he personally owns. "Even random people on the street sneer about their dislike of 'Government Motors,' but I think shares have huge potential over the next three years."
That's partially because of some larger-picture tailwinds: New vehicle sales over the past two years have been historically bad, used car prices are at record highs, and the U.S. vehicle fleet is aging.
"There's a coiled spring of demand waiting to unload -- there's only so long people can drive 10.5-year-old cars," Joe says. The company has streamlined its operations and its balance sheet is in good shape, plus Joe thinks the Chevy Volt will bring a lot of customers to the lots. As a relatively newly public company, the financials are still a challenge to decipher, but that's helping depress the share price. "When the next report rolls around, the financials will be much more transparent, and I think that'll be a catalyst to send the stock a lot higher. In the meantime, I love the fact that so many people hate GM."
And that's why it pays to watch. Keep your eyes on all of these companies by adding them to My Watchlist, your free and customized hub for the news and numbers on the companies you care about. Just click below to start.