This article is part of our Rising Star Portfolio series.
One man's trash is another man's treasure. The Un Portfolio takes that expression to heart by picking through the trash heap in search of good companies that are out of favor. Sometimes looking at beaten-down stocks yields nothing but Big Mac wrappers and old shoes, but from time to time, patient investors can find a great opportunity. Here are a few unloved stocks that piqued my interest in a recent screen (you can see the unfiltered results here).
Is Warren Buffett on sale?
Earlier this month, a lunch for eight with Warren Buffett auctioned for $2.3 million. Now that says something about the respect and admiration we all have for the world's greatest investor. Why, then, did Buffett's investment vehicle, Berkshire Hathaway (NYSE: BRK-B) pop up on the 52-week low list recently? Perhaps it's because of Sokolgate, perhaps because Berkshire is a proxy for sagging global economic growth (thanks to its diverse set of operating companies), or perhaps it owed to the hit its reinsurance operations took from the recent spate of extreme weather. Regardless, Berkshire's businesses have staying power, most have pricing power, and they're led with ample star power. With $41 billion in cash, an unmatched operating history, and a valuation hovering just above book value, I'm looking hard at adding Berkshire as a defensive name to the Un Portfolio.
How to frustrate a car thief
Ituron Location & Control (Nasdaq: ITRN) is a $970 million Israeli company with a track record of growth. It provides stolen vehicle recovery and tracking services to individuals and insurance companies in Israel, Brazil, Argentina, and the United States by installing security tracking devices that can disable a stolen vehicle and provide information on its whereabouts. A car that shuts off and doesn't drive has very little value to a car thief. Ituron protects more than 600,000 vehicles. While competition from LoJack and General Motors' (NYSE: GM) OnStar are more popular here in the States, Ituron's service has an entrenched position in with local insurance companies in its non-U.S. markets. It has grown its subscriber base by more than 80% over the past five years, and it carries almost no debt.
A global energy giant
Let's get the messy stuff out of the way first: Petrobras (NYSE: PBR) is controlled by the Brazilian government, which owns a 48% stake, but because of Brazilian law must control more than 50% of its voting shares. However, the company has investment grade ratings, making it perceived as even safer than Brazil's sovereign debt. Petrobras is the fifth-largest integrated oil company in terms of production and has the fourth largest proven oil and gas reserves. It plans on exceeding industry growth by investing for the future and using its offshore expertise to develop its offshore pre-salt fields. Petrobras has a long history of generating returns on equity above 15%, and its focus on maintaining an investment-grade credit rating means its balance sheet will have to stay in good shape. At only seven times next year's earnings, the shares seem look to be priced attractively.
Make sure you wear gloves
Trash often deserves its place in the bin, so be selective when you're rooting through the 52-week low list. If you'd like to discuss your favorite beaten-down stock swing by the Un Portfolio's discussion board.
This article is part of our Rising Star Portfolios series, where we give some of our most promising stock analysts cold, hard cash to manage on the Fool's behalf. We'd like you to track our performance and benefit from these real-money free stock picks. See all of our Rising Star analysts (and their portfolios).
