The market has severely punished many stocks over the past few weeks. I have been watching a number of stocks for signs of a bottom. When you see stocks either barely go down, hold steady or go up when the market is dropping, this can be a sign that a stock has bottomed. Another sign of a bottom is when there is just way too much pessimism and the stocks are at oversold levels. Finally, another sign is if the stock does not drop even when it is downgraded or if bad news is released.
The stocks below appear to be washed out and it looks like the sellers are exhausted, as they have all been showing recent signs of strength. Not only that, but they are also extremely cheap in terms of fundamental metrics such as P/E ratio, book value and future growth potential.
KB Home (KBH) shares are trading at $6.65. KB Home is a leading home builder. The 50 day moving average is $9.51 and the 200 day moving average is $11.85. Book value is $5.76 per share. Earnings estimates indicate a loss for 2011 and small profit of about 10 cents for 2012. KB Home has been losing money recently and continued weakness in the economy will further delay a recovery in profits for this company. One officer just bought 15,000 shares. You can see the insider buying here. Insider buying and a small bounce off of recent lows might be signaling this stock has bottomed out.
Force Protection (FRPT) shares are trading at $3.68. This defense contractor is based in South Carolina. The 50 day moving average is about $4.55 and the 200 day moving average is about $5.01. Earnings estimates are about 37 cents for 2011 and 44 cents for 2012. This gives FRPT shares a P/E ratio of only about 12.5 times earnings. This maker of armored vehicles has a very strong balance sheet with about $150 million in cash. According to Yahoo Finance, FRPT has about $150 million in cash on the balance sheet and a current market cap of about $257 million. You can see that data here. When you factor in the cash, the enterprise value of this company is only about $100 million.
Adobe Systems, Inc., (ADBE) shares are trading at $24.46. Adobe is a leading provider of publishing, web design and other software solutions and is based in California. The 50 day moving average is $29.44 and the 200 day moving average is $31.68. Earnings estimates for ADBE are at $2.27 per share in 2011 and $2.57 for 2012. The book value is $10.92. Adobe stock has fallen out of favor with investors for the last few months and that could be creating an opportunity for investors who buy now. Shares have fallen from a 52 week high of about $36, to current levels and have started to rebound slightly.
Synovus Financial Corp. (SNV) shares are trading at $1.40. Synovus is a regional bank located in Georgia. The 50 day moving average is about $1.95 and the 200 day moving average is about $2.34. Earnings estimates are a loss of 22 cents for 2011 and a profit of 18 cents for 2012. The dividend is 4 cents per share per year which is a yield of about 1.6%. SNV is trading well below book value of $2.47 per share. SNV could be a target for a major bank looking to expand in this region. This company has been considered to be a buyout target by many and regional banks continue to see a wave of buyout deals. With this stock trading at almost half of book value and for only a fraction of the 200 day moving average, this stock is way too cheap and is poised for a sharp rebound.
Xerox, Inc., (XRX) shares are trading at $8.22. Xerox is a leading maker of document equipment, software and related products, and is based in Connecticut. The 50 day moving average is about $9.61 and the 200 day moving average is $10.54. Earnings estimates for XRX are expected to be $1.07 for 2011 and $1.24 for 2012. The book value is $8.93 per share. XRX pays a dividend of 17 cents per share which is equivalent to a 1.7% yield. Xerox is very undervalued at only about 6 times 2012 earnings. Xerox is responsible for many incredible inventions and technological advances through its subsidiary called "PARC" or "Palo Alto Research Center", and the market does not appear to be fully valuing the potential here.
Mueller Water Products (MWA) is trading at $2.25. Mueller Water Products makes and markets water infrastructure, flow control, and piping component systems for use in water distribution and water treatment facilities. These shares have a 52 week range of $1.94 and $4.80. The 50 day moving average is $3.36 and the 200 day moving average is $3.82, so these shares are trading well below support levels. Estimates for MWA are for a loss of 4 cents in 2011, and profits of 18 cents per share in 2012. Book value is stated at $2.60. This stock regularly traded for $14 plus before the financial crisis in 2008. There is an enormous amount of water treatment and distribution infrastructure that needs to be upgraded in this country, and that will be a big opportunity for MWA. After plunging with the markets, MWA shares have started to show a small rebound off the recent lows.
The data is sourced from Yahoo Finance and Stockcharts.com. The information and data is believed to be accurate, but no guarantees or representations are made. Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for informational purposes only.