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 wacky 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, which had given each of the companies below a five-star rating (the highest) just 30 days ago:
|
Stock |
30-day return |
One-year return |
Current CAPS rating |
|---|---|---|---|
|
Mobile Mini |
(29.4%) |
(47.2%) |
**** |
|
VASCO Data Security |
(22.2%) |
140.4% |
***** |
|
First Cash Financial |
(17.4%) |
(11.5%) |
***** |
|
Terex |
(17.2%) |
43.4% |
***** |
|
Grant Prideco |
(13.3%) |
25.0% |
***** |
|
Columbia
Sportswear |
(12.4%) |
(14.9%) |
**** |
|
Palomar Medical Technologies |
(12.2%) |
(47.7%) |
**** |
Data from Motley Fool CAPS as of Oct. 30.
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 Motley Fool Hidden Gems pick Columbia Sportswear.
No love for change?
With Columbia down 12% over the past month, it'd be easy to assume that it has been either missing estimates or giving soft guidance for the next quarter, like many others in the retail industry. But not so fast -- third-quarter earnings per share handily beat Wall Street's projections, and its guidance for the full year was basically in line with what analysts were expecting.
The company shook things up a bit when it reported earnings, though, and announced an expanded initiative. The plan includes opening five new outlet stores this year and 15 per year in the years to come. Columbia hopes that this will give it more flexibility in dealing with inventory in its wholesale business. In addition, the company is planning to open some Columbia-brand retail stores to help increase brand awareness.
Players on CAPS see opportunity for Columbia that shines through the rest of the retail malaise. Before the earnings release, one of CAPS' top players, SarahGen, noted a recent distribution deal in Brazil, which she thinks "will be [a] huge growth opportunity." Overall, she said that Columbia's stock is in "scrumptious bottom-feeding territory."
Multiple players came to the same conclusion after earnings were announced, including Magistrate, who simply said that the stock is "[f]ar too beaten down."
So has the recent drop created a good buying opportunity? Or is Columbia's stock dead money? Let the community know what you think: Head over to CAPS and share your thoughts with the other 72,000-plus players. Even if you'd prefer to pass on Columbia, you can check out a couple of the other stocks listed above or any of the 5,000 stocks that are rated on CAPS.
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