Everybody knows the old adage "Buy low, sell high" -- but it's pretty humorous how few people take that advice to heart when things get ugly in the market. Take the market's recent more-than-10% pullback: Savvy investors came in to scoop up shares of beaten-down stocks on their watch list at a discount, while others ran from the market at a time of opportunity.
Now, that doesn't mean that every beaten-down stock is an opportunity, as many are trading cheap for a reason. Here, though, are three unloved stocks that have upside and could be poised to rebound for patient investors.
I don't want to sound unsympathetic when I say this, but part of me gets really excited when I see companies get pulled down by broader market forces when they may not necessarily deserve it. It's not that I like to see people's investment dollars go up in smoke, but these companies that get undeservedly hammered by the market can turn into pretty impressive buying opportunities. One of those opportunities today is Enterprise Products Partners (EPD 1.07%).
Anyone who's followed my writing knows I'm a big fan of Clean Energy Fuels (CLNE 2.01%), despite the beat-down the company's stock has taken over the past couple of years. And I'm probably in the minority of folks with a positive view of the company:
Dover (DOV 0.90%) is a diversified global manufacturer of innovative products and components through four major operating segments: energy, engineered systems, fluids, and refrigeration and food equipment. Like many unloved companies at the moment -- Dover is trading about 25% off its 52-week high -- the company's revenue has been significantly affected by headwinds in the North American energy markets and foreign currency exchange rates. However, there is still plenty to like about Dover as a long-term investment.
On Sept. 7, Dover announced its intent to acquire gas-pump company Tokheim's equipment-based business for $465 million. As a result, Dover expects to generate roughly $0.07 and $0.15 accretive earnings in 2016 and 2017, respectively. It's a move that secures a market leader in Europe with a large presence in key markets such as Italy, France, and Spain, and will help Dover's OPW business unit (a unit within Dover's Fluids segment) compete against global leaders.
Beyond acquisitions, upside remains for Dover's earnings as commodity costs ease and the company expands its manufacturing activities into lower-cost regions. Furthermore, Dover already generates strong cash flows, which help fund its acquisitions of smaller businesses within industries and markets it knows very well. Here's a quick glance at Dover's track record of success over the past decade:
Despite the company's headwinds in 2015, the company should continue to return value to shareholders through share repurchases and increased dividends while still having plenty of capital to acquire businesses for future growth. In time, as headwinds in the North American energy market subside, the company seems well poised to reward long-term shareholders.