Use access key #2 to skip to page content.

Wanted: stocks that have been crushed

Recs

0

March 10, 2015 – Comments (3) | RELATED TICKERS: POWR.DL , LL

I love it when stocks get crushed by the mercurial Mr. Market.  Accounting scandals, problems with new plants or products, rumors of lost contracts, etc...bring 'em on.  In my years of watching the markets I've found for every stock that sells off and really is in big trouble along the lines of an Enron there's several that eventually recover.  Those are the stocks that I'm looking for when I peruse the list of the market's biggest losers every morning.

I mentioned this theme the other day when I talked about my investment in PowerSecure International (POWR).  The once fast-growing company experienced some operational issues in 2014 that caused its stock to fall by around 50% IN ONE DAY.  That's the sort of move that gets my attention.  I bought in after the panic selling and have done pretty well with it so far.

What a beautiful chart 

 

Another stock that I looked at after a recent major selloff is Lumber Liquidators (LL).  While the company was once beloved amongst growth investors, that's not my cup of tea so fortunately I was a spectator and not a shareholder as the company saw its stock drop by nearly 70% from its high in 2014.

I added shares of LL here in CAPS the other day to keep an eye on the situation.  The funny thing is though, even after the absolute beating that the stock has taken it still doesn't look absurdly cheap to me.  Yes, the once high-flier now trades at less than 14 times trailing earnings.  My issue is that those are pre-lawsuit, pre-negative publicity, pre-likely-new-and-more-expensive-supplier earnings.  I'm not saying that I wouldn't eventually consider buying into LL.  I certainly don't believe that the company is worth nearly as little as the well-known fund manager who is short the stock, Whitney Tilson, claims to believe, but I'm not ready to buy in yet.  I'll re-visit the situation if the company takes another solid beating.

Speaking of companies that have experienced major selloffs, I came across a great SA article about one this morning.   According to the author's claims, which I have not independently verified yet, it looks as though there is very minimal to no downside in the stock,  It's definitely a very interesting situation that's definitely worth a read.

Noranda Income Fund: Get Paid To Wait For A Win-Win

Summary

•NIF, an entity designed to provide stable dividends to shareholders, has been oversold due to newly added cautionary language about the end of the supply agreement between Glencore and NIF.

•As a going concern, NIF is valued today at C$5.12 per share, a 73.0% a premium to the current share price.

•In an unlikely conservative liquidation scenario, NIF is valued today at C$3.55 per share, a 19.9% premium to the current share price excluding the value of the smelter or land.


http://seekingalpha.com/article/2983896-noranda-income-fund-get-paid-to-wait-for-a-win-win?ifp=0

Thanks for stopping by everyone.  Make sure to rec and comment.  I'd love to hear others' thoughts on the Lumber Liquidators situation and any other recent stocks that have sold off that look interesting.

Jason 

3 Comments – Post Your Own

#1) On March 10, 2015 at 11:52 AM, ElCid16 (93.91) wrote:

I noticed you green-thumbed OCN, but haven't picked its spinoff ASPS.  Like OCN, it's down about 80% on the year.

Report this comment
#2) On March 10, 2015 at 4:08 PM, TMFDeej (98.40) wrote:

Thanks for the heads up, ElCid.  I'll take a look at it.

Jason 

Report this comment
#3) On March 12, 2015 at 3:49 PM, shalumov (97.72) wrote:

Looks like LL starting the recovery

Report this comment

Featured Broker Partners