Market volatility isn't all bad. One of the good things about the wild price swings we've been experiencing lately is that it clears the rust off investor complacency.
Until last week, checking market charts for new highs and lows was really just a parade of companies hitting new 52-week highs. Last week's Greek tragedy changed that. Things were actually pretty level on Nasdaq, where 227 stocks hit new lows, nearly even with the 239 equities that hit fresh peaks.
However, just because a stock got slammed to a new low last week, that doesn't mean it's heading lower. In fact, now that we have several quality names on the list of losers, I'm confident that many of them will bounce back.
Here are four stocks from last week's list of 52-week lows that I think will bounce back quickly.
|
Stock |
5/10/10 |
High |
Low |
|---|---|---|---|
|
A123 Systems (Nasdaq: AONE) |
$9.70 |
$28.20 |
$8.10 |
|
ExxonMobil (NYSE: XOM) |
$64.79 |
$76.54 |
$58.46 |
|
China Real Estate Info (Nasdaq: CRIC) |
$8.35 |
$17.15 |
$7.55 |
|
Novatel Wireless (Nasdaq: NVTL) |
$6.00 |
$13.70 |
$5.60 |
Source: Yahoo! Finance.
Let's go over the four losers that may be winners.
A123
It didn't take long for one of last year's hottest IPOs to become a broken one. The lithium-ion-batteries specialist went public in September at $13.50 a pop. It traded as high as $28.20 just two weeks later. A123's potential, particularly in electric cars, created the sizzle.
It certainly wasn't the financials, since A123 has been posting losses. Revenue popped 33% last year to $91 million, but that didn't justify the market cap of nearly $3 billion that A123 had at its peak. Some would rightfully argue that the company has no business carrying even its current $1 billion market cap given its trailing fundamentals, regardless of how tonight's quarterly report turns out.
Yes, A123 reports later today, but this stock has never been about the here and now. The next-generation battery maker's thesis has always been about fuel efficiency transportation and energy consumption of tomorrow. Investors can get in now, nearly a year after the IPO investors, at a price that's substantially lower.
ExxonMobil
The collateral damage of BP's (NYSE: BP) bubblin' crude dilemma has struck its rivals. ExxonMobil commands the country's chunkiest market cap, but that's no consolation when oil stocks are falling out of favor.
The irony is that prices at the pump are heading higher, cruelly enough as we head into the summer travel season. Analysts see ExxonMobil earning $5.86 a share this year, after posting a profit of $4.01 a share last year. The 2011 outlook is equally as bright, with the pros targeting net income of $7.13 a share. Along the way, investors are enjoying a healthy 2.8% dividend yield.
Naturally, there's always the possibility that BP's Gulf gaffe will speed up consumer acceptance of more fuel-efficient cars, easing demand for ExxonMobil's juice. Is it a contradiction to have both ExxonMobil and A123 on the same list? Buy both to cover all bases.
China Real Estate Information
As another busted IPO, China Real Estate Info has fallen below last year's initial price tag of $12 apiece.
The company was formed as a combination of the real estate research arms of SINA (Nasdaq: SINA) and E-House (NYSE: EJ). Even if there is a housing bubble in China, there will still be demand for the company's market research. Analysts see China Real Estate Info earning $0.52 a share this year on a 79% top-line surge. Growth should continue next year, as Wall Street expects a profit of $0.68 a share on a 30% revenue uptick.
In a nutshell, this is another attractive Chinese stock trading in the single digits.
Novatel Wireless
The maker of the MiFi mobile hotspot -- a portable router that provides online access for up to five devices at the same time -- hasn't been much of an investing hotspot these days. Revenue growth has been uninspiring and flat, even though MiFi sales (now accounting for 47% of total revenue) continue to grow.
The real allure of Novatel is its balance sheet. The company closed out its latest quarter with $139.5 million in cash and marketable securities. Divide that by the 31.2 million shares outstanding, and you see that Novatel isn't selling for much more than the $4.47 per share in cash and equivalents on its balance sheet.
MiFi now has a worthy rival in the 4G Overdrive, but everything from iPads to netbooks to in-car gadgetry dovetails nicely with the mobile hotspot trend. Novatel offers an intriguing combination of value and growth at this price point.
