I am always looking for a good deal, whether that means buying an extra box of Cocoa Puffs when they're on sale or pouncing on undervalued stocks. The idea that anybody would sell a stock for less than its 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 crazy guy named Mr. Market. Mr. Market's game is to pay you house calls on a daily basis to offer 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 and offer you premium prices for your holdings, while at other times he'll be totally depressed about the future and will offer 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 (out of 5) |
|---|---|---|---|
|
Synalloy |
(37.7%) |
119.0% |
**** |
|
Tefron |
(18.4%) |
(34.4%) |
**** |
|
Meridian Resource Group |
(16.0%) |
(13.2%) |
***** |
|
Comeco |
(15.9%) |
20.3% |
**** |
|
MEDTOX Scientific |
(14.6%) |
162.9% |
**** |
|
Cemex |
(12.8%) |
33.4% |
***** |
|
Nabors Industries |
(10.6%) |
3.1% |
***** |
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 Cemex.
Mixing it up with Cemex
Though you may be hard-pressed to find an industry less exciting than cement and rocks, exciting companies don't have a monopoly on making money for investors. Cemex, a dual pick for The Motley Fool's Stock Advisor and Global Gains newsletters, is one of the world leaders in concrete, cement, and aggregates, and it sure has been making money for its investors. The stock has nearly tripled over the past five years, and it has averaged 23% appreciation per year.
The already large company is set to get even bigger, as it is completing a $15 billion hostile bid for Australian competitor Rinker. On Monday, the company announced that its tender offer for Rinker's shares had expired and it had successfully bought 95.6% of all outstanding shares. Under Australian law, Cemex is continuing with a compulsory acquisition of the remaining shares. Although unhappy investors still holding Rinker shares could attempt legal proceedings, the fat lady has pretty much sung here.
The Rinker acquisition will give Cemex a stronger foothold in the U.S. -- the market that has been hurting Cemex a bit recently -- but it will also help the company diversify further into Australia and that growth-happy China market.
The state of the U.S. market has been putting Cemex under pressure lately, but CAPS players haven't budged on their love for the company. CAPS players have given the stock 1,437 outperform ratings versus just 34 underperform ratings. One of CAPS' top players, pencils2, stuck his thumb in the air for Cemex back in late May:
Cement is an industry that will be booming in India, Russia, South America, and China (Along with other areas), and Cemex has operations in all of those places. A 100-year-old company with increasing income, high EPS, low P/E compared to the industry average, and the price has recently taken a hit. I see a great opportunity here for the long run as long as cement stays in high demand.
So is it time for Cemex's stock to get back to trekking higher? Or are all of the bulls on CAPS wrong? Let the community know what you think -- head over to CAPS and share your thoughts with the other 60,000-plus players currently part of the community. Even if you'd prefer to pass on Cemex, you can check out a couple of the other stocks listed above -- or any of the 4,700 stocks that are rated on CAPS.
More CAPS Foolishness:
Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. You can check out Matt's CAPS portfolio here, or tune into his CAPS blog here. The Fool's disclosure policy suggests that you ignore any phone calls from brokers at J.T. Marlin.
