There are way too many companies staring at the floor instead of the ceiling these days.
Take a look at Nasdaq-listed stocks, where there were just 52 new highs against 711 fresh 52-week lows last week. It gets even scarier on the Big Board, with 835 companies notching new floorboards.
Worrywarts will argue that the out-of-favor stocks will continue to move lower, but I see an opportunity here. Many of the beaten-down equities offer real value at these price points. Some of the stocks inching their way lower either have underappreciated catalysts or are just too darn cheap to trade this low for too much longer.
Let me go over five names that clocked in with new lows last week that I think may be ready to turn the corner.
|
Company |
Last Week's Low |
52-Week High |
|---|---|---|
| E*TRADE Financial (Nasdaq: ETFC) | $9.40 | $18.13 |
| Netflix (Nasdaq: NFLX) | $125.02 | $304.79 |
| OpenTable (Nasdaq: OPEN) | $43.25 | $118.66 |
| Teavana Holdings (NYSE: TEA) | $18.61 | $29.35 |
| Renren (NYSE: RENN) | $4.96 | $24.00 |
Source: Yahoo! Finance.
Tennis balls bounce back, even though eggs don't
Let's start at the top with E*TRADE.
The irony of the summer volatility that has sent shares of most companies -- discount brokers included -- lower, is that E*TRADE benefits financially from the instability. Worrywarts sell. Opportunists buy. Speculators go on margin.
When E*TRADE executed a 1-for-10 reverse split last year, it probably thought the days of trading in the single digits were over. Well, not exactly.
The discounter is in its best shape in years. The ill-advised banking operations that seemed to doom the company during the darkest subprime lending days are less problematic. E*TRADE's quarterly losses turned into profits, and analysts see the Web-based broker earning $0.68 a share this year and $0.94 a share next year.
As for Netflix, I explained the three reasons why I felt the beleaguered video service was ready to bounce back earlier this week.
- Netflix continues to strike new content deals to make its streaming service superior.
- The competition isn't as close as they need to be in order to court defectors.
- It's been awhile, but Netflix shares are finally cheap.
Netflix is now trading for less than 20 times next year's projected profitability. If you believe that Netflix will overcome its recent blunders, it's hard to ask for a better price.
OpenTable is the undisputed leader when it comes to online reservations. OpenTable arms participating restaurants with electronic reservation books that combine reservations though OpenTable.com and its popular mobile app with traditional call-in requests. Google's (Nasdaq: GOOG) move to buy Zagat falsely heightened competition concerns earlier this month.
Teavana is a fast-growing upscale retail chain specializing in hard-to-find teas and artisan tea gear. Net sales rose 36% with earnings soaring 78% in its first quarter as a public company. Its unique concept and high sales per square foot is making it a desirable mall tenant. There are 179 locations, with plans to open 50 new stores this fiscal year alone.
Renren went public earlier this year as China's Facebook, but its IPO was insanely overpriced by valuing the upstart at a whopping $5.6 billion. The fast-growing social networking site now has a more reasonable market cap of roughly $2.2 billion.
Keep reaching for the stars
I know I won't be right on many of these. If the market weakens further, there's little to stop these companies from hitting even fresher 52-week lows down the line.
However, these five stocks are attractively priced right now. Somebody has to call bottom -- so why not me?
If you want to see if Rick is right -- or wrong -- follow the stocks through the free My Watchlist feature.
- Add Teavana Holdings to My Watchlist.
- Add Renren to My Watchlist.
- Add OpenTable to My Watchlist.
- Add Netflix to My Watchlist.
- Add E*TRADE Financial to My Watchlist.
