Seeking Alpha
Profile| Send Message|
( followers)  

By Richard Saintvilus

As the first-quarter of 2013 has now ended, it's time to assess where the market is in terms of valuations. It is also the time for investors to reassess their positions and press the "reset" buttons on mistakes that they've made over the past three months. There are some stocks/sectors that should be sold as there are some that still look very attractive.

That's said, I will also remind investors that stocks today aren't as cheap as they appear - at least not to the extent that we saw low valuations in the summer of 2011. This is when forward P/Es were low across the board. For example, two years ago the P/E for the S&P 500 had plummeted to a low of 10. Today it is almost at 14. With that in mind, here are some stocks that investors should consider.

Buy Oracle (ORCL) - Target $40

Shares of Oracle are trading at Oracle at $33.83. The stock has seen a slight rebound after the Q3 disappointment. This is even though some are still suggesting that the company is doomed. But Oracle has been actively building for its future by going on an acquisition spree - most recently, picking off Acme Packet. But there are also some concerns, however.

As noted, the company didn't have an exceptionally strong Q3 with revenue coming at more than 4% below Street estimates. However, this performance does not take away from the company's solid market position and long-term value. Management blamed it on poor sales execution. Plus, Oracle is not known to have historically strong third-quarter performances.

Still, I wouldn't get carried away here. The weak quarter does not signal loss market share. And investors should expect these sales delays to be closed in the Q4 report. Besides, the sub-par sales figures didn't impact profitability. Net income arrived at $2.5 billion, or $0.52 per share. Excluding items, earnings actually rose to $0.65 per share. I'm positive about Oracle's prospects for the next quarter, especially since corporate enterprises will have more clarity about government spending.

With 2013 earnings estimates being $2.69 per share, the stock is now trading at a P/E of just 12, or 6 below the S&P 500 average of stocks in Oracle's category. In a market where stocks often take off and never look back, Oracle is now giving opportunistic investors a second change to buy.

Buy Intel (INTC) - Target $25

Shares of Intel are down almost 3% to $21.66 due to ICD's recent report that PC sales have slumped 14%. Nevertheless, it's hard to ignore Intel at these levels. The stock is merely percentage points from its 52-week low. While Intel is not expected to get back to the dominant growth performance of the late 90's, there's still quite a bit of good in this company. For the full fiscal year, the company expects revenue to come in the range of $53.83 to $55.4 billion - higher than Street estimates of $54.3 billion.

What's more, that Intel's midpoint guidance was slightly higher than Street estimates is a welcomed sign of confidence. But for Intel to realize this performance, the company must address competitive pressure in the mobile space. The good news is, things are beginning to fall in place. According to TechCrunch, investors should expect LTE-compatible chips from Intel at some point this year.

These will allow Intel to power more smartphones and seek more growth opportunities in tablets. I also picked up on the conference call that management announced plans to make its next generation tablet SoC (system on chip) codenamed "Bay Trail" available to Google's (NASDAQ:GOOG) Android platform. This means that Intel is now "inside" a total of seven smartphone designs.

Intel is not out of the woods yet, but the company is no longer in a swamp either. The good news is that the mobile devices market is still growing and the company's R&D investments demonstrate that it plans to stay competitive. In the meantime, by buying back its own shares, Intel still sees value in its own stock, which is always a great sign despite the market's bearishness.

Buy Facebook (FB) - Target $30

Facebook is up more than $2 ever since announcing "Home is where its profit is." Not everyone was very welcoming, however. The company wants/needs to stay relevant. Evolve or die has been the mantra in tech for years. To that end, Facebook doesn't feel it has a choice but to fully embrace a phone and tie in its features, especially with more and more of its users migrating from desktop to smartphones. But, Facebook wants to make that experience better.

The company is talking less and executing more, which is a good sign of maturity. But Facebook is anything but mature. For its current investors, that's a good thing. After all, the company is still trying to overcome growing pains. But the company's "going home" and along with strong advertising revenue growth, this stock should regain its $30 level by the time Facebook reports earnings in a couple of weeks.

For now, the relative success of the new "home" feature may vary - depending on what metric is used. But let's assume it is "mildly successful" and Facebook is able to "moderately" monetize it. If the company can immediately roll it out globally at low incremental costs, while attracting more users, this stock can reach the low $40s by the end of the year.

Facebook is now performing as well as it can. Although the company is certainly not out of the woods just yet, evidence suggests that at least, it's moving in the right direction. Now would not be a good time to start doubting Facebook's ability - not when it seems it has finally figured out mobile.

Buy Sirius XM (SIRI) - Target $3.50

It's hard to not like Sirius XM's prospects after the company just announced another leadership change. This time, the company now has a new chairman. Greg Maffei, the CEO of Liberty Media will assume the new post vacated by Eddy Hartenstein, who will step down, but remain on the board. It seems all of Liberty's pieces are coming together and uncertainties surrounding Sirius are being removed.

However, there's still quite a bit of noise as some analysts are not as bullish as they use to be. But with the stock trading at $3.15, there's the possibility of 15% to 20% upside from here. However, not everyone agrees. Zacks recently downgraded the stock to underperform with a "strong sell" rating. Zacks cited a reduction in Sirius' subscriber outlook as cause for concern.

Zack's contends that Sirius added more than 1.66 million Self-Pay subscribers in 2012, but the company is not expected to add more than 1.6 million more this year. While that's a valid concern, Zacks ignored that Sirius raised subscriber guidance three times last year after the company originally guided for 1.3 million subscribers. But I'm certain that Zacks knows this.

Instead, it is Sirius valuation, which has soared 73% over the past year, that's really the concern. In other words, some feel that it's time to take some profits. Look, this is hard to argue against. I will never get in the way of anyone cashing out. However, though, there are still plenty of positives with this stock that will propel it higher.

Zack's also cited concerns about Sirius' business model, which is predicated on car sales. I agree there - I've pounded the table on this for the past couple of years. Nevertheless, in that regard, it's not the same to say the model isn't working, especially since self-pay subs grew 36% to roughly 1.7 million in the recent quarter. This demonstrates how much customers still love the service. It also proves how attractive Sirius will soon be as an acquisition candidate.

Source: 4 Stocks Making News To Buy Now