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 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 inconsolably 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. Each of the companies below had been given a five-star rating (the highest) by our community of investors just 30 days ago:
|
Stock |
30-day return |
One-year return |
Current CAPS rating |
|---|---|---|---|
|
51job |
(28.5%) |
(39%) |
**** |
|
Nordson |
(27.4%) |
1.1% |
**** |
|
National Oilwell Varco |
(13.5%) |
(4.5%) |
***** |
|
Chicago Bridge & Iron |
(14.2%) |
(26.9%) |
***** |
|
Sadia |
(14%) |
24% |
***** |
|
Cresud |
(12.9%) |
(45.8%) |
***** |
|
Molson Coors Brewing |
(11.9%) |
7.1% |
***** |
Data from Motley Fool CAPS as of September 3.
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 Molson Coors.
Why so blue?
Somebody get Molson Coors a beer -- it needs it after the month it's had. In early August the Canadian brewer took the stage to announce second quarter earnings, and investors put on a bitter beef face and sold off the stock.
Though sales rose almost 5%, GAAP profit fell nearly 50%, thanks largely to one time charges that included the write-down of the book value of the Molson brands sold in the U.S. Even on a non-GAAP basis, earnings per share were down slightly from the prior year and missed Wall Street's expectations by a considerable margin. Management blamed the drop on the fierce headwind that energy and commodity costs are providing.
What the bulls say
Molson Coors' management certainly isn't rolling over. In fact, the company is excited about the recently closed joint venture with SABMiller to create MillerCoors -- a U.S. brewing powerhouse that's hoped to be able to compete better with Anheuser-Busch
On CAPS, the stock has attracted over 400 bullish members against just 26 members that think the stock will lag the rest of the market. And why do CAPS members think the stock will outperform? TMFBigVice -- a member who is dedicated to tracking so-called "sin stocks" -- had a lot to say on this front back in early August:
While I think the market's reaction to the [second quarter earnings] report was a bit harsh, the company's valuation was too frothy to begin with, so a pullback of this magnitude isn't all that surprising. ...
However, the pullback presents a decent opportunity for the BigVice portfolio to take a sip of [Molson Coors]. At $49, I consider the stock only slightly undervalued. ...
For [Molson Coors] investors with a long time horizon, today's news shouldn't make you close your tab. In fact, it may be time to order another.
So do you think the recent drop has created a good buying opportunity? Or is there more downside ahead? Let the community know what you think -- head over to CAPS and share your thoughts with the other 115,000-plus players currently part of the community. Even if you'd prefer to pass on Molson Coors, you can check out a couple of the other stocks listed above or any of the 5,500 stocks that are rated on CAPS.
More CAPS Foolishness:
