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5 Bargains to Buy Now
What’s that you say? There’s a good reason for the discounts on Wall Street. If you haven’t noticed, stocks are damaged goods these
days…Yes, I’ve noticed, but I also believe there are some incredible bargains in the market. The greatest time to be a buyer is when
there is blood in the streets, and today that blood runs deep. And the long-term track record of owning stocks is irrefutable. There
is no better asset class for investors desiring to earn maximum returns on capital. So, why not take advantage of the bargains on
Wall Street–there are deals to be found in the wreckage.I started my search by looking at key sectors that I believe will outperform the greater market over the next 12 to 24 months. The
key variable for this list is to find profitable companies that are trading for multiples of earnings that are less than the rate
such earnings are growing. Absent that, I wanted to present companies that simply trade for low multiples of earnings that I believe
will grow at a greater rate down the road.My five bargains are…
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Bargain #1: Yum! Brands, Inc. (YUM)
We all know that fast food has been king during this recession. Value meals have been attracting cash strapped consumers in droves,
and the headline of this trend has been McDonald’s (MCD). Its shares
have been one of the
few winners in this crisis.Riding the coattails of MCD, but as of yet not seeing any noticeable appreciation in its stock, is Yum! Brands, Inc. (YUM).
YUM is a huge player in the fast-food restaurant business. Its brands include Taco Bell, KFC and Pizza Hut.While the casual dining space has suffered during this downturn, fast food is growing. YUM stock does not reflect that growth in
my opinion. The
company is profitable, and shares trade for less than 15 times trailing earnings, but only 12 times forward earnings. Analysts
expect earnings to grow by 15% or more next year.And that’s a bargain to be exploited.
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Bargain #2: The Mosaic Company (MOS)
I made Mosaic (MOS) one of my Top 10 Stock Picks for 2009, and I’m glad I did. Shares of MOS are already up more than 30% since the start of the year. So how can this stock be a Presidents’
Day bargain?The answer is simple: There are more gains to come for this key supplier of nutrients to the agriculture sector. In 2008, hedge
funds and other institutions were forced to sell shares of MOS as a result of margin calls. There was nothing fundamentally wrong
with the future prospects of MOS. If anything, those prospects were more promising as food and agriculture typically perform well
during recessionary periods. Investors should have been buying this stock, not selling it.Now MOS is on sale. Shares trade for only $44 per share, well below the 52-week peak of $163. The company is very profitable, and
at current prices, shares trade for less than 6 times earnings.As they say, what a bargain!
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Bargain #3: Apple Inc. (AAPL)
Apple Inc. (AAPL) should be a core holding in any portfolio. It is one of the best-run, most innovative and profitable companies in the world. Its
products are far superior to its competitors’, and its ability to innovate continues to amaze. You will not find a better investment
in the market. And just for Presidents’ Day weekend, you can buy shares at a discount.All of this nonsense over the health of company leader, Steve Jobs, has put a cap on its share price. With gains in personal computer
sales, continued dominance in music with iPod and the huge potential of its iPhone, the future of AAPL is certain no matter who is
at the helm. (Apple Inc. is also one of the tech companies surviving the bear. Learn
more here.)At a minimum, there is five years of huge growth potential with just the current line-up of offerings. Include any new products
that come as a result of research and development, and AAPL will be set for years to come. It just doesn’t matter what happens to
Steve Jobs.You have to own this company, and anything below $100 is a steal.
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Bargain #4: Google (GOOG)
Another must-own company for any portfolio is Google (GOOG). Worries about the recession and the economy have prevented shares of GOOG from rising to appropriate levels that truly reflect its
worth. The stock is on sale.GOOG dominates search and has shown recently that businesses are still spending on advertising on the Internet. With the bang for
the buck being greater in cyberspace, businesses are flocking to GOOG with their ad dollars. And it shows in the companies results.
Imagine where that spending would be in a period of economic prosperity.Don’t wait for that prosperity to find out. Get to your broker and pick up shares of this dominate company. Think about Microsoft
(MSFT) in its heyday. MSFT was the must-own stock in the 1980s. What’s
happening at GOOG is a similar story. In fact, GOOG success is playing a big role in the ultimate demise of MSFT. In the coming years,
look for GOOG to not only dominate search, but to make headway on operating systems and open architecture software directly competing
against MSFT.The
potential for GOOG is quite large, and shares are now selling at a discount to its growth rate.
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Bargain #5: Tesoro Corp. (TSO)
Another big winner of late has been the oil refiners. I made Tesoro (TSO) one of my Top 10 Stocks for 2009, and shares of this oil refiner have not disappointed. TSO has gained more than 35% so far in 2009.
Like Mosaic, it’s natural to ask if shares of Tesoro are a bargain today. They are. The oil refining business depends on stable
crude prices in order to generate profits. With margins slim, there is little room for error. No wonder that record volatility in
oil prices have nearly ruined the prospects for the oil refiners. The record swings in price resulted in TSO losing most of its market
value in 2008.This year, though, the story is different. Volatility in price is still very much a part of the crude markets, but there is much
more stability as compared to last year. We are trading in a fairly narrow range, and we have been doing so for several months. Such
a state allows refiners to operate profitably which explains why shares of TSO exploded to the upside.And there is more room to grow–the decimation in 2008 was severe. Even if shares of TSO double from current levels, the stock would
trade for less than its 52-week highs. Investors had priced TSO as if the business were about to go bankrupt. That’s not the case
and what allows you to buy at a discount today.For more top stock picks, check out:
