The Best Deals the Market Has to Offer
Retailers will be offering some great deals this holiday weekend, but stores aren’t the only place where bargains can be found this Presidents Day.
Despite what many consider to be an overbought market, the Fed’s devotion to quantitative easing continues to push stocks higher and higher. For now, the bull appears to be here to stay. And while this is a good thing for investors, it is growing increasingly hard to find cheap stocks to buy. But they are out there.
That’s why our experts have put together a list of stocks that represent good bargains right now. Check out these cheap stocks to buy:
Animal Health International (AHII)
Animal Health International (NASDAQ: AHII) sells and distributes animal health products, supplies, services and technology. The stock is having a great year so far, up nearly 40%. The strength continued since the company announced a 16% jump in earnings last week.
Cattle producers’ spirits have been lifted by higher prices, and they are willing to spend more on AHII’s product. The company’s veterinary business has also been quite strong, aided by a competitor going out of business last year. Even with the recent rally, I see good value here in what is really an undiscovered commodities play on higher food prices.
Buy AHII below $4.
Activision Blizzard (ATVI)
Last week, I was one of the few analysts that sided with Activision Blizzard’s (NASDAQ: ATVI) decision to toss out the “Guitar Hero” franchise in order to focus on more profitable venues such as online gaming. This week, others have jumped on the bandwagon. ATVI also is expanding its reach into the micro-transaction market in China, wherein a large number of gamers make small-dollar purchases, which is now the largest income generator for Chinese game makers in the massively multi-player game scene. Already benefiting from its “World of Warcraft” franchise in this sector, ATVI will grow its market share by pushing its “Call of Duty” franchise further into this market.
And the company is slated for more international growth as Major League Gaming, the largest professional competitive video game league, joins forces with IMG, the global sports and entertainment company, to expand to new markets outside of North America.
Unlike the rash media and investors that took ATVI’s shares down last week, I consider this to be a sterling buying opportunity. Buy ATVI up to $12 per share.
The PMI Group (PMI)
Residential mortgage insurance provider The PMI Group (NYSE: PMI) announced a larger-than-expected earnings loss this week of $1.14 per share. This was a big improvement over the loss of $2.76 a share in the fourth quarter of 2009, but it was well below the Street’s expectations for a loss of 68 cents. The biggest reasons for the shortfall was a 12-cent-per-share charge for the revaluation of corporate securities owned by the company and an income tax expense — as opposed to a credit — as a result of the company repositioning its investment portfolio.
I can live with those one-time items because there was positive news in the key parts of the business, namely that the total number of new mortgage default notices declined to 28,864 from 29,175 in the previous quarter.
What’s most important is that underlying credit trends continue to improve. If the labor market can continue to firm up, then the amount and severity of defaults should keep declining and the stock will see a turnaround. Longer term, a smaller Fannie Mae and Freddie Mac will leave higher-quality business to private insurers like PMI.
Buy PMI under $4.80.
Wave Systems (WAVX)
Digital security company Wave Systems (NASDAQ: WAVX) announced a new agreement with the South Carolina Department of Revenue for Wave’s EMBASSY software to manage data security for its fleet of laptops. With revenue agents toting laptops around, the security of that data becomes paramount. Consequently, WAVX’s self-encrypting drives (SEDs) ensure the data is protected 24/7. After analyzing several competitors’ software, the Department of Revenue chose WAVX’s for its “significant performance advantages.”
In a recent Forbes interview, George Gilder, who sits on Wave’s board of directors, touted WAVE’s trusted platform modules to increase computer security in the cloud, which is one of the reasons why I like this company so much
Buy WAVX up to $4.20.
Radcom Ltd. (RDCM)
Israel-based software maker Radcom Ltd. (NASDAQ: RDCM) reported strong earnings results for the fourth quarter earlier this month. It logged quarterly sales of $5.4 million, up 29% year-over-year, and earnings of $500,000, or 8 cents per share, a 104% yearly increase. I can tell you just based on the year-over-year comparisons that these results are quite strong.
The company stands to benefit from the implementation of 4G/LTE technology over the next year as more and more businesses use Radcom’s products to ensure the integrity of their networks. Radcom is also rapidly expanding into emerging markets, with 32% of its sales coming from Latin America, and 19% of its sales coming from Asia/Pacific last year.
Buy RDCM below $13.
Zale Corporation (ZLC)
Jeweler Zale Corporation (NYSE: ZLC) remains well below its recent highs, and that’s why it’s a good buy before earnings, which come out on Feb. 23.
The company has turned itself around under new CEO Theo Killion and already has reported strong sales for the first two months of the quarter — its critical selling season. Mr. Killion has hinted Zale is close to returning to profitability, and if it is, even slim operating margins can produce enough earnings for the stock to do very well from current prices.
ZLC is a buy under $5.
Ballantyne Strong (BTN)
Ballantyne Strong Inc. (AMEX: BTN) is a leader in the transition to digital and 3-D, and also finds itself handsomely profiting as the transition takes hold across the industry. Already a leader in the “whole theater” concept, BTN is poised to capture even more market share as the transition to digital ramps up.
Experienced at selling into the Asian markets, the company will have first dibs on the growth to come as China, particularly, begins a rapid expansion phase. Last month, the company announced orders to two new customers in Asia, as it continues expanding its market share in that growing region. China will be a major catalyst in the growth of BTN, and with its economic progress, I think we’ll see some great momentum in shares.
Buy BTN up to $8.15.