Getting Ahead Of The January Effect Part II

Includes: APA, INTC, MDR, NVDA
by: Bret Jensen

"Opportunity is missed by most people because it is dressed in overalls and looks like work."
--Thomas A. Edison

I wanted to follow up on my article Friday on the January Effect. It focused on four stocks that lost money in 2012 but could have a stronger start for the coming year once tax loss selling and window dressing by fund managers is complete. This should occur by the end of the year and is commonly known as the "January Effect". Here are four more cheap stocks that have had a down 2012 but could be winners in 2013. The first two have been recently covered by me in previous pieces so I will just provide a quick value proposition synopsis along with a link to a previous article covering the stock in more detail. The last two selections I will provide a more detailed analysis.

Apache (NYSE:APA) is down some 15% so far in 2012. One of the cheaper major oil & gas concerns at just 1% over book value and under 8x forward earnings. For more analysis on APA, click here.

NVIDIA (NASDAQ:NVDA) is another stock down around 15% for the year. One of the cheaper tech stocks around with net cash accounting for more than 40% of the stock's market capitalization with a nice dividend of 2.5% to boot. For more analysis on NVDA, click here.

Intel (NASDAQ:INTC) has lost almost 20% of its market capitalization in the first 11 months of 2012. It has been hurt by the slowdown in PC sales and migration to mobile products. However, there are myriad reasons to believe it will perform better in 2013

4 reasons Intel is a deep value stock at under $25 a share:

  1. It provides a generous yield of 4.6% with an A rated balance sheet. Look for it to be included in the "Dogs of the Dow" to start the year.
  2. The stock is selling at the very bottom of its five year valuation range based on P/E, P/B, P/CF and P/S.
  3. By the end of 2013, it should have a new CEO and be making better progress in Mobile. Having a primary competitor, Advance Micro Devices (NYSE:AMD), on the verge of bankruptcy is also helpful on the margins. The stock is too cheap at under 5 times operating cash flow.
  4. INTC has solid long term technical support at these levels (See Chart).

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McDermott International (NYSE:MDR) is off some 10% since the beginning of the year. This oil services and construction provider is lined up to have a better 2013.

4 reasons MDR is a significant bargain at just under $11 a share:

  1. The 11 analysts that cover the stock have a median price target of $15 a share on the stock, some 40% above the current stock price.
  2. The company has over $550mm in net cash on its balance sheet (more than 20% of its current market capitalization)
  3. The stock is selling at the bottom of its five year valuation range based on P/E, P/B, P/CF and P/S.
  4. MDR has good long term technical support at just under the current price level (See Chart).

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Disclosure: I am long APA, INTC, NVDA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.