Tag Archive for cheap stocks

Our Latest SeekingAlpha Article: 3 Inexpensive Stocks to Research

April 28, 2012 Equities

If you thought hog farming, commodity trading, and global shipping were pretty unrelated businesses to be in, think again. Seaboard (SEB) has vertically integrated its business and has created around 2 Billion of shareholder equity in the process. At a market cap of just 7% or so above book value, Seaboard looks undervalued when factoring in the company’s 6.4X PE ratio and stellar long-term growth rate.

In fact, Seaboard has managed to more than double its cash flows from operating activities over the past three years. Many analysts have questioned this growth rate, but the fact remains that the company is one of the best managed conglomerate businesses in the world. With any commodity business, however, one must view the cyclical nature of the industry with a good deal of skepticism and certainly shipping is thought to be cheap for a good reason right now.

Investors in Genco Shipping GNK and Excel Maritime EXM know exactly what I am talking about. Unlike the dry bulk shippers, Seaboard has a more diversified business model which can even out the volatility during the hard times. Renaissance Technologies and Kahn Brothers & Company are two of the larger names invested here, but I expect the hedge fund community to take notice if earnings and cash flow remain on a positive trajectory.

Read More Here: http://seekingalpha.com/article/539291-3-inexpensive-stocks-that-hedge-funds-are-buying

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8 Dirt Cheap Stocks to Buy

September 14, 2011 Equities

Solid long-term investing should be a little more boring that it usually is for the average investor. Trying to get cute and buy dirt-cheap stocks without catalysts can often end up costing investors hard-earned money. Finding blue chip companies whose shares are beaten down and undervalued is a less exciting strategy than buying dirt-cheap asset plays with a catalyst, however sticking with the big and boring companies pays dividends over the years if you stick to your discipline and realize that the greatest bull markets usually are, well, kind of boring.

Look at gold: Its rise has been pretty meteoric, yet gold bulls still get looked at funny at investment conferences and certainly would garner little respect for their incredibly boring yet incredibly brilliant investment at the Berkshire Hathaway (BRK.A) annual meetings. That said, a boring investment in a dull yellow metal has outperformed just about all other investment classes over the past five years.

Here are 8 dirt-cheap stocks to consider. Some of them may be too boring to diligently research for many of you, but I would counter that during today’s financial engineering armageddon, it’s far better to invest like an 80-year-old than to invest like a 20-year-old. In fact, go ahead and sell call options against your stock in these names if, like me, you think the overall markets may have a bit more downside left before finding a permanent low.

Teradyne (TER) is a cheap Magic Fomula stock that keeps getting cheaper. If metrics like a 6.60X P/E ratio, a 2.77X EV/EBITDA Ratio, an 8X forward estimate, and a 32% return on equity don’t get you out of bed early in the morning, I don’t know what will. TER lost a good deal of money a couple of years ago, but is slowly making its way back. Because of the losses in recent years, Graham would probably avoid this name at this point in time, but that doesn’t mean the shares aren’t a bargain at current levels.

SanDisk (SNDK), another Magic Formula name, has rallied a bit higher over the past few trading sessions, but shares are still relatively undervalued at current levels. Brian Pampcara at the Motley Fool did a good job of explaining that Sandisk is really in the Flash business more than anything else, and described why Flash was in a long-term bull market, because tablets like the iPad depend on Flash memory versus hard drives. With a trailing P/E ratio of just 7X, Sandisk shares appear to be a good bargain at these levels. SNDK has a forward P/E of 8.33X with a price-to-book ratio of 1.45X and an EV/EBITDA of only 4.65X.

Read the rest of this article at Seekingalpha:
http://seekingalpha.com/article/293182-8-statistically-underpriced-stocks-for-long-term-investors-consideration

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Fraud Exchange — Scams Moving Higher While “Cheap” Stocks are Slaughtered

July 7, 2011 Scams

So in the past few months we have noticed a disturbing trend: stocks with no earnings, book value, cash flows, etc… are moving up in a vertical manner while companies with book value, earnings, cash flows, etc… are getting crushed.

Part of this comes from the fact that companies with low price to book values are sometimes pure frauds, while web-based companies are being valued on eyeballs and mouseclicks again.

My advice: Buy Silver and Gold Bullion and bury it somewhere and make a map (but don’t take your 4G cell phone with you!). I see a time when the US has to devalue the dollar to pay off the sickening and insane debts — this will force the country to confiscate gold and silver… While I am not advocating breaking that law, I am saying that it is what it is.

In the 1930′s, the government ordered gold to be confiscated and when they did, citizens had to sell it for $25 an ounce. As soon as they sold their gold for $25 an ounce, the government revalued gold at $35 an ounce.

Many economists view the current state of affairs as the 1930′s, others view this as Japan, and many are predicting a return to the 1990′s… What I see is a little bit of all three — the real economy is in a depression, which resembles Japan’s because of the debt load, while tech stocks are in a super-bubble. Wierd to say the least!

I see gold heading to $3000 an ounce eventually, which is why I expect the government will have to confiscate in the near future… If you move your bullion offshore you should be fine…

America is the best country on Earth, but there is so much fraud right now that you have to put your savings outside of the architecture that exists and hold hard assets. I have previously advocated farmland as a good play but I now think Gold and Silver look better because of their “monetary” function.

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Investment Ideas For This Crazy Trading Environment

June 7, 2011 Equities

So, we have been pretty accurate recently suggesting investors go long Gold and short overvalued stocks. Right now, I feel the long PM’s short stock trade should continue to outperform. CNBC had quite a few silver bears on the air today and the metal even sold off a bit before FED speak came on the air declaring that, as Hedgephone readers already know, America owes a TON of money to seniors via Medicare and Social Security. I view Silver and Gold as your best hedge against this debt dilemma and also against more Quantitative Easing. Commodities have been weak recently other than Gold, but I think Agriculture is likely a good long term buy at these prices. Likewise, Silver is not in backwardization which should put a tailwind behind rising prices for the metal.

On the short side, I would want to be short calls or long calendar put spreads on the IWM or QQQ or select overvalued equities. I would be very aware of the technical levels in the market, including $1300 and $1310 on the S&P 500 as well as $56 and $57 on the QQQ… $2700 is a must hold level for the Nasdaq, as is $80 on the IWM… I am a bit suprised that the markets have been this resilient but I do feel we are overvalued here in general and would not want to recommend buying a long term index fund position as much as finding cheap stocks to own over the long term. KO, MCD, PEP, JNJ, RIMM, GOOG, etc… all look like good values and I will continue to update readers on my favorite longer term large cap ideas, but remember that each investor much make up his or her own mind based on their own due diligence. This site is clearly a research and idea generation hub and not a “tip” generator.

Select “cheap” and undervalued issues also look interesting and to find stocks trading below Net Current assets, investors may want to check our “Values” page as well as Oldschoolvalue.com, Cheapstocks.net, Greenbackd.com, etc… — essentially there are several companies which are now trading at prices far below their Net Current Assets minus total liabilities…

A brief list of them includes, Voxx, HAST, VII, GBR, HWG, TBAC, and several others… For disclosure, at Hedgephone we put our money where our mouth is and will be long most of the names we talk about here, including these “cigar butt” stocks…

In essence, the short side is looking decent but we would prefer selling naked At the money or above the money call options on overvalued issues such as LNKD, NFLX, YOKU, etc… etc… while investing our cash in names that trade significantly below liquidation values here… Also, stocks trading at 5X earnings are always interesting to look at and often make good longer term investments… So, keep an eye on stocks that are unreasonably cheap as valuations are incredibly bifurcated here, with leading stocks such as AMZN, OPEN, LULU, CRM, etc… trading for bubble-like multiples while several quality businesses can be purchased for 5-8X earnings and even lower multiples on free cash flows.

All the best Hedgephones and remember to do your own Due Diligence!

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