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4 Beaten-Down Names to Buy Now

These falling knives are worth the risk of catching

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Funny thing about this old-school copier maker, though — it has grown earnings right in step with the advent of the photocopier’s fade-away.

How’s that? Because Xerox is hardly just a copy machine manufacturer anymore. It’s transitioning into digital document management, and doing so well. In fact, it’s doing very well, despite doubts from traders. Although near 52-week lows, XRX shares are priced at a paltry 7.1 times trailing earnings, and only 6.6 times forward-looking earnings, and the company has a solid growth streak going.

Republic Services

There’s an old cliché: “The only things that are certain are death and taxes.”

I disagree. There’s a third certainty in life: trash. As long as you’re alive and kicking and paying taxes, you’re also throwing garbage away.

It’s a point worth remaking following waste management company Republic Services’ (NYSE:RSG) earnings miss last quarter. The pros were expecting a profit of 42 cents per share, and the company only turned in 38 cents. The company also dialed back its outlook for 2012, just a little.

A miss is a miss, and reeling in an outlook never helps. Let’s take a step back and look at the bigger picture here, though. It’s the first time Republic Services has missed in years, and with the exception of last quarter, the company has been another of the market’s stunningly reliable growers. Shares fell 17% on the news, anyway, almost to new 52-week lows.

One has to wonder of the less optimistic outlook was just a little sandbagging. And even if it wasn’t, the forward-looking P/E of 12.2 along with the company’s history isn’t likely to let the stock be priced this low for long.

Bottom Line

Yes, it’s tough (and dangerous) to catch a falling knife. Sometimes it’s worth the risk, though, and for the true long-termers, hyper-precision trading isn’t even all that critical. Don’t overthink things here. Just know that in cases like the four above, the key strategy is simple: “Good stocks at low prices.”

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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