4 Cheap Stocks That Could Easily Double

Includes: ATPAQ, CSCO, F, INTC
by: Investment Underground

We took a look at the equity investment universe to find some names that we think could double from here. Here are 4 names we think offer substantial upside potential:

Cisco (NASDAQ:CSCO): Shares have been weak as of late, but a return to its core focus should permit CSCO shares to head towards the top of the current trading range, and the push closer to $30 by the end of 2012.

Citibank (NYSE:C) recently forecast a return to IT growth rates to 1.5-2xs GDP growth. Cisco should be pleased, as the world’s largest purveyor of data networking equipment. It is trading relatively low at $15/share. While hot social media company names are dominating the headlines, we think Cisco offers a compelling value play. We think CEO John Chambers has a good shot at turning around the company and getting Cisco's growth engine revving again. Its forward P/E of 9.8 also suggests it is currently attractive for investors. With a coordinated effort to stabilize Japan and the world’s currently meek-voiced economic momentum, it is reassuring for the analysts at Citi as much as it is for those who decided to lever their portfolios to this trend through Cisco.

At $15 per share, we think CSCO's share price is the best bargain in the tech space given the company's industry dominance.

Ford (NYSE:F): CEO Alan Mulally has now turned in seven quarters of profits for shareholders. The company proclaimed 50% sales growth by 2015, which the lion's share of growth coming from China and India. Currently Ford is playing catch-up in those two markets, where rivals General Motors (GM) and Toyota (TM) have a significant head start.

The other piece of good news comes from Ford CFO, Lewis Booth, who said net debt would be cut by $2.6 billion to around $14 billion by the end of June. Ford is no longer in survival mode, as these executives claim, but rather it is now in growth mode. Astonishingly, a whopping 55% of Ford sales will come from small cars by mid-decade. Large SUVs and popular Ford pick-up trucks have dominated Ford sales and profitability for the last decade.

This spring's market share gains by U.S. automakers, including Ford and General Motors, will leave a lasting mark at the expense of Toyota. Ford is still trading at a very low $13 per share, well below where it could trade a year from now.

On a discounted cash flow basis, shares will be worth just under $30 in 2012. EPS for 2011 is forecast at 113% with a five-year projection of nearly 13%. Broad trends suggest that Ford is stealthily improving its position in the competitive landscape.

As Ford pays off its debt-load and investors recognize it, we think shares will likely double.

ATP Oil and Gas (ATPG): 2010 year-end proved reserves were 126.4 million barrels of oil equivalent with a pre-tax PV-10 value of $2.6 billion using SEC pricing as of December 31, 2010. ATP’s reserves are located 62% in the deep water Gulf of Mexico, 4% on the Gulf of Mexico shelf and 34% in the North Sea. What sets ATP Oil and Gas apart from larger independent exploration and production competitors Andarko (APC) and Apache (APA) is significant growth.

Investors in the oil and gas space have already forgotten that ATP was nearly a takeover target after General Electric (GE) took a look at buying the company last summer. A large part of the value of the company comes from its infrastructure, which, while significant and valuable on a standalone basis, provides a platform that many competitors in the industry are missing. This company drew in $438 million in revenues in 2010.

ATP has established a beachhead in Israel, with several drilling licenses in-hand. We expect big things from this company, led by T. Paul Buhlman. In a timely move that would have cost ATP much more just a month later, the company raised a bunch of debt just before BP's Gulf spill. It's too bad that British Petroleum (NYSE:BP) has nothing close to the state-of-the art technology enjoyed by ATP. Using replacement cost method for ATP's rigs, the company's flagship rig, Titan, which is slated to be producing within the next two months, would fetch in the ballpark of $600 million alone.

As credited to Seeking Alpha contributor, George Fisher, "ATPG needs 40+ mboe per diem production to become financial viable in the long-term." We think that "long-term" will be "this year," given that Titan operations will bring 7 mboe per day. With two permits expecting approval from the BOEMRE this year, ATP should have all of the tools and permits it needs to become truly cash-flow positive in the long-run.

An additional barrel of oil production in the gulf for ATP costs next to nothing now that most major pipeline and well-head initiatives are in place. With Titan financed and other major rigs already drilling or prepped to drill, ATP has the opportunity to double in price from today's $16 per share. For our full valuation of ATPG, click here.

Intel (NASDAQ:INTC) This chip maker has a 5 year P/S average of 3.2, and it currently trades at 2.7 times sales per share. In 2005, 2006 and 2007, the multiples were 4.0, 3.4 and 4.1, respectively. Intel Corporation has been designing and developing integrated circuits since 1968. With a market cap of $118.3 billion, Intel is a behemoth of a company and easily the world's largest producer of computer chips. The company has a defensible competitive moat, unlike chief rival AMD (NYSE:AMD).

The company drew in $43.6 billion in revenues in 2010, which is an increase of 24.19%, after declining 6.5% in 2009. Net income came in at $11.46 billion (+162.39%). In 2009, profits were only $4.36 billion (- 17.4%). In 2010 and 2009, profit margins were 65.3% and 55.69%, respectively, and the EBT margins were 36.78% and 16.2%, respectively. ROIC [return on invested capital] climbed to 24% in 2010 after posting only 10.28% in 2009. Clearly, Intel has been doing something right: It holds more than its share of the market. Intel still produces around 80% of the world's CPUs.

At a multiple of 10x for this year's earnings, Intel has tremendous earnings power going forward. Tailwinds from still-pent-up demand following the latest recession and secular, global demand growth for chips should compress Intel's multiple even further than next year's earnings multiple around 9. Trading around $21, we think Intel shares could hit $40 by the end of 2012, as earnings surprise to the upside and multiple expansion, rather than contraction, takes hold.

Further growth is possible if Intel is able to make the right acquisition at the right price. We think Linear Tech (NASDAQ:LLTC) and Maxim Integrated (NASDAQ:MXIM) would be accreditive acquisition candidates.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.