I am currently upbeat on three stocks that I view as especially good opportunities right now for longer-term profits. These are good stocks to consider if you have cash to put to work:
Halliburton (NYSE:HAL) has drifted back some in the last week since reporting a solid first quarter, and I view current prices as a good entry point as I believe the last quarter could prove to be a turning point for the stock.
The company beat expectations by 4 cents a share, but the real key was management’s comments that margins in North America will remain above 20% this year, which means that earnings for the year should stay above $3 a share, which the market was starting to worry might not happen.
The North American gas business is weak and will likely remain that way, but the gas rigs are being shifted to oil production. While there is margin pressure from the resulting shift in assets, it is still much better than having idle assets. This should help give earnings greater sustainability than the market is currently pricing in.
Meanwhile, the price of oil remains high, which is encouraging drilling in the Gulf of Mexico, and global growth holds a lot of potential for Halliburton.
Earnings prospects show the stock is undervalued at current prices.
3SBio’s (NASDAQ:SSRX) strong March has not carried over into April, but it remains a Top Buy this month based on an earnings catalyst. The company represents an outstanding combination of value and growth, with earnings per share likely to grow nearly 20% this year. After a solid fourth-quarter report, chances are high first-quarter earnings (scheduled for mid-May) should be a nice boost for the shares.
There is still plenty of growth ahead for the company’s core products: EPIAO, an injection that stimulates the red blood cells in patients with anemia, and TPIAO, which treats chemotherapy-induced thrombocytopenia, a disease that reduces platelets in blood. Other products such as biosimilars (which are basically generic versions of biologic drugs), as well as strong international sales, will help drive growth as well.
SSRX is still being pressured by a lack of market confidence in emerging Chinese companies, but I see that changing down the line. The stock is attractively valued for a growth stock, selling for a little over 13X 2012 estimates, and the company has zero debt on its strong balance sheet.
AeroVironment (NASDAQ:AVAV) has struggled along with the rest of the market, but it is well-positioned to snap back. While budget cuts are an issue for many defense-related firms, it is highly unlikely we will see cuts in spending on unmanned aircraft.
AVAV is an innovator in this field, and these types of aircraft are highly popular with the military thanks to their usefulness in combat and surveillance. Management is confident it can increase sales in divisions of the military it does not currently serve, and the company is experiencing strong growth right now from its PumaAE model, an “all environment” aircraft that can land in air and water. Domestic use of unmanned aircraft is also set to increase.
AVAV is not scheduled to report fiscal fourth-quarter results until late June, but earnings are expected to grow from $1.17 a year ago to $1.31, and then advance further to $1.46 in its 2013 fiscal year.
The stock sells at 17X April 2013 estimates – an attractive valuation made all the more appealing by the company’s $181 million of net cash on its balance sheet, which is equal to $8.30 a share.