While I know there are plenty of scrubs on this site (I myself could be considered one of them to an extent), I think there is also a wealth of knowledge out there as well. With the stock markets getting crushed overall the past few weeks, there must be some very very fundamentally undervalued stocks out there if you are willing to buy and hold for at least a few years while things recover.
Lets get a thread going of people's stock picks for fundamentally undervalued companies, and their reasoning for their pick.
I'm a believer in telecom; most of all Verizon (VZ)
The stock's been beat down with the general market despite strong earnings which haven't really been impacted by the downturn over the past year. People aren't going to cut off their cell phones and cable even when times get tough. These things are almost like consumer staples nowadays. Sentiment toward FIOS as it continues to branch into new areas, and it has a lot of expanding to go, seems pretty strong and will probably continue to eat away at market share from cable and satellite TV companies. Very nice dividend (.46 quarterly) over 5% which they have been raising consistently over the past few years, the most recent of which just came at the end of the summer and I don't see anything in the near future that would put this dividend in jeopardy. I think the stock's a buy for the long haul even at it's current levels though I'm sure there will be opportunities to get in at a lower level over the next few months.
Always interested in hearing a contrarian POV...
Funnymentals... lol. buy and hold is a suckers game.
It know it's not sexy, but I'd recommend buying and holding BAC, WFC, and JPM. These guys are going to be around forever, and will likely dominate finance as we come out of this crisis. You may not get the absolute bottom (timing the market is difficult) but holding these stocks for the next 5-10 years will pay off handsomely in my opinion.
That said, there's also plenty of opportunities to day-trade the financials. NCC and GS/MS move pretty signifigantly on rumors and news. I'd also think NCC is either a takeover at premium target or at risk of going out of business, depending on who you ask - either way there is a trade.
I also believe AAPL is undervalued - they've been killing it in notebooks and desktops, gaining market share like crazy - and the iPhone is only growing worldwide. Yes, they will be hurt by consumer spending, but again, buy and hold - I think it's near a bottom.
If merger arb is your thing, there's a solid ~7% premium to be captured on the BAC/MER deal, now that you can short financials again and lock in that spread. I don't think there's any way this deal doesn't close.
Those are my trades at the moment - anyone disagree/agree?
agree on aapl, high flying puked out by HFs looking to raise capital, has certainly been oversold and think this is the reason you see it holding up the past two days despite the market and qqqq selloff. new product lines (esp announcement of more affordable macbook) as well as continued penetration of the iphone will lead to more crossover sales (ie macbooks). agree this is a long term hold.
i personally think the risk/reward offered by risk arb in this market is not attractive, but i do think the bac/mer deal is fairly solid (take this with a grain of salt as i am not a risk arb expert nor have i read the merger agreement).
many of the energy stocks are also trading crazy cheap fundamentally (especially coal, i still like ANR/MEE). tough to recommend these though as i dont think the commodity unwind is fully over.
i also like shorting oil in this market (either through USO puts or DUG), as i believe it has further downside.
regardless of what you do, it is prudent to hedge some of your risk, if you are long tons of nasdaq stocks, put some money into a nasdaq ultrashort for example. i also think covered calls are a good play here in general to cap some of your upside, provide income, and take advantage of the elevated vol in the mkt
SFI (iStar Financial) At this point its a binary situation where the stock is either going to 0 or a 5x return I doubled down the other day at $.85 and sold around $2.00 today. The stock has been highly volatile but for a speculative gun-slinging young guy (like most of us) the return is worth the risk.
And I agree buy and hold is a suckers game...after 10 years we are right back where we started and people have seen their nest eggs wiped out
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