5 Undervalued Stocks That Can Crush The Market# Stock
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By Larry Gellar
After a terrible third quarter, many investors are looking for ways to
profit in Q4. While PowerShares QQQ (QQQ) and SPDR S&P 500 (SPY) might get
decent returns, here are 5 stocks that will beat the market:
Applied Materials, Inc. (AMAT) has been falling, as the tech sector
continues to sell off. Weak demand is hurting these companies quite a bit,
although Applied Materials recently made a lucrative deal with Toshiba. The
company will provide Toshiba with specialized software, and here’s what one
of Applied Materials’ general mangers Charlie Pappis had to say: “We`re
extremely pleased to be able to help a technology leader such as Toshiba
increase the return on their existing lithography assets. We believe that
all 300mm fabs can benefit significantly from our SmartSched software
solution, extending beyond litho to other bottleneck tool areas of a factory
.” Other things that shareholders are excited about include the company’s
improving solar lineup and a quarterly cash dividend of $.08. Important
competitors for Applied Materials include KLA-Tencor (KLAC) and Lam Research
(LRCX). AMAT has a lower price/earnings to growth ratio and lower price-to-
sales ratio than both of those companies, although price-to-earnings ratio
falls in the middle. Margins are a bit on the low side, with gross margin at
42.85% and operating margin at 24.58%. As for cash flows, $281 milllion
came in during fiscal year 2010 and $3.16 billion came in during the 9
months after that. Cash from operating activities and debt offerings have
fueled recent inflows.
After a tough week, Yahoo! Inc. (YHOO) is just now bouncing back. This is
due to a remark from Alibaba CEO Jack Ma that his company is very interested
in acquiring Yahoo. Meanwhile, the Wall Street Journal is also reporting
that Yahoo is still in the midst of finding a new CEO. Needless to say,
looking for a new CEO and looking for someone to buy the company at the same
time isn’t exactly an ideal situation. Regardless, Yahoo is still an
enormously valuable franchise. The company is also working on its problem of
declining site views by bringing Facebook into the mix. Indeed, visitors to
Yahoo’s web site will now be able to use Facebook’s ever-popular “like”
button. This is just scratching the surface, as a partnership between
Facebook and Yahoo could be quite successful. Important competitors for
Yahoo include AOL (AOL) and Google (GOOG). Yahoo falls in the middle of
those two for categories like price to earnings, price/earnings to growth,
price to sales, gross margin, and operating margin. As for cash flows, the
company brought in $251 million during 2010 and $54.41 million for the first
half of 2011. Strong inflows from operating activities have played a large
part in this.
Halliburton Company (HAL) has gotten shellacked lately, and this has been
mainly fueled by economic concerns. It also appears that the company will
have to pay $200 million to one-time business partner Barracuda & Caratinga,
which doesn’t help either. That actually stems from business conducted via
the KBR subsidiary prior to it being spun off. Halliburton shareholders
have also been closely following the price of oil. Events in the eurozone
are what have been driving the cost of that commodity lately, and future
news will continue to have a big impact. If oil prices can make a sustained
run, Halliburton will benefit accordingly. In other news, Kara Brockmeyer is
going to be the new leader for the SEC’s foreign bribery division.
Halliburton shareholders will remember her as being the one to force
Halliburton into a settlement over questionable practices in Nigeria. Baker
Hughes (BHI) and Schlumberger (SLB) are two of Halliburton’s biggest
competitors. Halliburton has the best operating margin out of the three but
also the worst gross margin. Other statistics like price to earnings, price/
earnings to growth, and price to sales are somewhat low for Halliburton. As
for cash flows, $684 million streamed out during 2010 and $40 million
streamed in during the first half of 2011.
Las Vegas Sands Corp. (LVS) has gotten slammed lately, no thanks to a beta
of 4.04. Also at the forefront of shareholders concerns is recent poor
economic data from China. In fact, many investors are speculating that
profits from Macau could dry up, as China’s wealthy hold back on gambling.
That hasn’t stopped Las Vegas Sands from seeking additional financing
though, and some news outlets are reporting that the company just took out a
5-year loan for $3.7 billion. Important competitors for Las Vegas Sands
include MGM Resorts (MGM) and Wynn Resorts (WYNN). Wynn actually has more
exposure to China than Las Vegas Sands, so that could be a good play for
investors who think China won’t be slowing down anytime soon. Additionally,
with a price-to-earnings ratio of 32.3 and price-to-sales ratio of 3.59,
many investors may be inclined to think that Las Vegas Sands is overpriced.
Price/earnings to growth is more reasonable at 0.56, as is the company’s
gross margin of 47.02%. Furthermore, operating margin of 23.75% is quite
strong and quarterly revenue growth is 47.1%. As for cash flows, $1.918
billion flowed out during 2010 and $442 million during the first half of
2011. Capital expenditures played a large role in the 2010 outflow.
Walgreen Co. (WAG) is becoming an increasingly popular stock, especially
after the company reported strong fourth-quarter earnings. One highlight was
big increases in same-stores sales, and drug sales are still doing fine for
this troubled economy. Regardless, some investors are worried that Walgreen
’s model of smaller stores more focused on pharmaceuticals may be going out
of fashion. Meanwhile, Walgreen is involved in a heated dispute with
Express Scripts (ESRX). Walgreen wants more compensation from the network,
but Express Scripts isn’t budging. Note that Express Scripts is also
working on buying Medco (MHS), so there’s a lot on the line here for
Walgreen in terms of customers who might stop shopping there. Additionally,
many of Walgreen’s customers are switching to getting their drugs directly
via mail. Important competitors for Walgreen include CVS (CVS), Rite Aid (
RAD), and Wal-Mart (WMT). Rite Aid has negative trailing twelve month
earnings, while price-to-earnings ratios for the other companies are about
in line with Walgreen. Price/earnings to growth of 1.09 is pretty low, as is
price to sales of 0.41. At 0.04, price to sales for Rite Aid is struggling.
As for margins, Walgreen is pretty strong in this area – gross margin is
28.39% and operating margin is 5.45%.
After a terrible third quarter, many investors are looking for ways to
profit in Q4. While PowerShares QQQ (QQQ) and SPDR S&P 500 (SPY) might get
decent returns, here are 5 stocks that will beat the market:
Applied Materials, Inc. (AMAT) has been falling, as the tech sector
continues to sell off. Weak demand is hurting these companies quite a bit,
although Applied Materials recently made a lucrative deal with Toshiba. The
company will provide Toshiba with specialized software, and here’s what one
of Applied Materials’ general mangers Charlie Pappis had to say: “We`re
extremely pleased to be able to help a technology leader such as Toshiba
increase the return on their existing lithography assets. We believe that
all 300mm fabs can benefit significantly from our SmartSched software
solution, extending beyond litho to other bottleneck tool areas of a factory
.” Other things that shareholders are excited about include the company’s
improving solar lineup and a quarterly cash dividend of $.08. Important
competitors for Applied Materials include KLA-Tencor (KLAC) and Lam Research
(LRCX). AMAT has a lower price/earnings to growth ratio and lower price-to-
sales ratio than both of those companies, although price-to-earnings ratio
falls in the middle. Margins are a bit on the low side, with gross margin at
42.85% and operating margin at 24.58%. As for cash flows, $281 milllion
came in during fiscal year 2010 and $3.16 billion came in during the 9
months after that. Cash from operating activities and debt offerings have
fueled recent inflows.
After a tough week, Yahoo! Inc. (YHOO) is just now bouncing back. This is
due to a remark from Alibaba CEO Jack Ma that his company is very interested
in acquiring Yahoo. Meanwhile, the Wall Street Journal is also reporting
that Yahoo is still in the midst of finding a new CEO. Needless to say,
looking for a new CEO and looking for someone to buy the company at the same
time isn’t exactly an ideal situation. Regardless, Yahoo is still an
enormously valuable franchise. The company is also working on its problem of
declining site views by bringing Facebook into the mix. Indeed, visitors to
Yahoo’s web site will now be able to use Facebook’s ever-popular “like”
button. This is just scratching the surface, as a partnership between
Facebook and Yahoo could be quite successful. Important competitors for
Yahoo include AOL (AOL) and Google (GOOG). Yahoo falls in the middle of
those two for categories like price to earnings, price/earnings to growth,
price to sales, gross margin, and operating margin. As for cash flows, the
company brought in $251 million during 2010 and $54.41 million for the first
half of 2011. Strong inflows from operating activities have played a large
part in this.
Halliburton Company (HAL) has gotten shellacked lately, and this has been
mainly fueled by economic concerns. It also appears that the company will
have to pay $200 million to one-time business partner Barracuda & Caratinga,
which doesn’t help either. That actually stems from business conducted via
the KBR subsidiary prior to it being spun off. Halliburton shareholders
have also been closely following the price of oil. Events in the eurozone
are what have been driving the cost of that commodity lately, and future
news will continue to have a big impact. If oil prices can make a sustained
run, Halliburton will benefit accordingly. In other news, Kara Brockmeyer is
going to be the new leader for the SEC’s foreign bribery division.
Halliburton shareholders will remember her as being the one to force
Halliburton into a settlement over questionable practices in Nigeria. Baker
Hughes (BHI) and Schlumberger (SLB) are two of Halliburton’s biggest
competitors. Halliburton has the best operating margin out of the three but
also the worst gross margin. Other statistics like price to earnings, price/
earnings to growth, and price to sales are somewhat low for Halliburton. As
for cash flows, $684 million streamed out during 2010 and $40 million
streamed in during the first half of 2011.
Las Vegas Sands Corp. (LVS) has gotten slammed lately, no thanks to a beta
of 4.04. Also at the forefront of shareholders concerns is recent poor
economic data from China. In fact, many investors are speculating that
profits from Macau could dry up, as China’s wealthy hold back on gambling.
That hasn’t stopped Las Vegas Sands from seeking additional financing
though, and some news outlets are reporting that the company just took out a
5-year loan for $3.7 billion. Important competitors for Las Vegas Sands
include MGM Resorts (MGM) and Wynn Resorts (WYNN). Wynn actually has more
exposure to China than Las Vegas Sands, so that could be a good play for
investors who think China won’t be slowing down anytime soon. Additionally,
with a price-to-earnings ratio of 32.3 and price-to-sales ratio of 3.59,
many investors may be inclined to think that Las Vegas Sands is overpriced.
Price/earnings to growth is more reasonable at 0.56, as is the company’s
gross margin of 47.02%. Furthermore, operating margin of 23.75% is quite
strong and quarterly revenue growth is 47.1%. As for cash flows, $1.918
billion flowed out during 2010 and $442 million during the first half of
2011. Capital expenditures played a large role in the 2010 outflow.
Walgreen Co. (WAG) is becoming an increasingly popular stock, especially
after the company reported strong fourth-quarter earnings. One highlight was
big increases in same-stores sales, and drug sales are still doing fine for
this troubled economy. Regardless, some investors are worried that Walgreen
’s model of smaller stores more focused on pharmaceuticals may be going out
of fashion. Meanwhile, Walgreen is involved in a heated dispute with
Express Scripts (ESRX). Walgreen wants more compensation from the network,
but Express Scripts isn’t budging. Note that Express Scripts is also
working on buying Medco (MHS), so there’s a lot on the line here for
Walgreen in terms of customers who might stop shopping there. Additionally,
many of Walgreen’s customers are switching to getting their drugs directly
via mail. Important competitors for Walgreen include CVS (CVS), Rite Aid (
RAD), and Wal-Mart (WMT). Rite Aid has negative trailing twelve month
earnings, while price-to-earnings ratios for the other companies are about
in line with Walgreen. Price/earnings to growth of 1.09 is pretty low, as is
price to sales of 0.41. At 0.04, price to sales for Rite Aid is struggling.
As for margins, Walgreen is pretty strong in this area – gross margin is
28.39% and operating margin is 5.45%.