I am always looking for a good deal, whether that means buying an extra box of Golden Grahams 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 (no relation to the cereal) tells us, by way of allegory, how we can look out for these situations.
In The Intelligent Investor, Graham introduces readers to a wacky chap 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 inconsolably depressed about the future and will offer to sell you what he has for as low as pennies on the dollar.
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. Each of the companies below had been given a five-star rating (the highest) by our community of investors just 30 days ago:
|
Stock |
1-Month Return |
1-Year Return |
Current CAPS Rating |
|---|---|---|---|
|
Harvest Energy Trust |
(13.0%) |
(69.7%) |
***** |
|
Huntsman |
(11.9%) |
(53.4%) |
***** |
|
AgFeed Industries |
(7.8%) |
(56.8%) |
***** |
|
Rofin-Sinar Technologies |
(7.4%) |
(35.8%) |
***** |
|
McDermott International |
(6.9%) |
(65.0%) |
***** |
|
Flowserve |
(6.5%) |
(49.4%) |
***** |
|
Chicago Bridge & Iron |
(5.8%) |
(62.9%) |
***** |
Data from Motley Fool CAPS as of July 21, 2009.
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 further research. I'll even get you started with some thoughts on Motley Fool Hidden Gems pick Rofin-Sinar.
Why so blue?
If we stretch our look at Rofin's stock back to a bit earlier in June, it's actually fallen around 16% from the high it hit back then. The fact that the stock has slid recently probably shouldn't be too surprising, though, considering it doubled between early March and June. A furious climb like that is bound to leave a stock winded.
Investors may also be concerned that the operating environment for Rofin in the near future could be about as enticing as a bathtub full of piranhas. Rofin sells industrial and precision lasers across a wide range of industries, but has significant exposure to the industrial and automotive sector through customers like Honda
The company also relies on Europe for around half of its total sales, and some experts seem to think that the economic malaise in Europe could exceed that in the U.S. in some respects.
When Rofin announced its fiscal-second-quarter earnings back in May, management sounded a bullish note, saying that they expected government stimulus efforts to help stimulate new sales. In early August, the company will announce fiscal-third-quarter results and we'll have a chance to see how those stimulus programs are actually panning out.
What the bulls say
More than 1,300 CAPS members have weighed in on Rofin-Sinar's stock, and the overwhelming bullishness has led to a perfect five-star rating for the stock.
So what are these Rofin bulls seeing that the market may be overlooking right now? CAPS member JMJeffrey has had a thumb up on Rofin since October, when he pitched:
I love the fact that while this is a first rate European company (a [Siemens] spinoff) it is based in Michigan (my home state). There is a big market for these types products and the company has a strong international sales base and has begun to develop a foothold in China and emerging markets. Doing all the right things but the share price has suffered due to overall market fears and a slight 2Q guidence miss. Long have I watched this laser shoot high into the sky. But now that it has fallen back to earth for some retooling I am going to jump on board. This is a great business in growing market with great fundamentals and a discount price.
Though the stock price has bounced around since JMJeffrey's outperform rating, it has managed to find its way back to almost the same price.
But here's the important question: Do you think the recent drop has created a good buying opportunity? Head over to CAPS and share your thoughts with the other 135,000 members currently part of the community. Even if you'd prefer to pass on Rofin-Sinar, you can check out a couple of the other stocks listed above or any of the 5,300 stocks that are rated on CAPS.
More CAPS Foolishness:
