These six large cap or better stocks have great stories, positive catalysts for future growth, are extremely oversold based on the current RSI indicator and have substantial quarterly EPS growth rates of greater than 30 percent.
The earnings per share of a company is conceivably the most important statistic to understand before investing in a company’s stock. Each and every time you consider starting a position in a stock, you should prudently scrutinize the earnings information for the company. The reason earnings are so vital to investors is because they tell you about the relative profitability of a company.
Earnings per share (EPS) is defined as the net income of a company divided by the shares of common stock outstanding. With the earnings per share measure, you are looking at the amount of money left over for shareholders. The value is reported after taxes are subtracted, and we are "normalizing" those profits by stating them on a per- share basis. When a company is profitable, and has money to give back to shareholders in the form of earnings, the company has two basic options. It can distribute some of the earnings in the form of a stock dividend. Whatever is not paid out in the form of dividends is placed into the retained earnings, which then become a source of money, or capital, which can be used to help fund the growth of a company. The RSI Indicator is a good tool to help identify overbought/ oversold conditions, divergences, and crossovers that investors use to identify new trends in a stock or the market.
Known as the Relative Strength Index, the RSI was developed by J. Welles Wilder in 1978 to measure the relative strength of price currently compared with its price history over a set number of periods. The RSI indicator is plotted on a panel above or below the price chart. It is easy to identify the set-up as the RSI indicator shows the market’s strength compared with the historical price trend. Most traders and investors use the RSI Indicator. As a measure of overbought and oversold conditions, the RSI indicator provides investors a way to identify a security or index that is reversing direction. When RSI is above 70, it is signaling an overbought condition, indicating an investor needs to be ready to close long positions or establish downside protection. As the RSI turns down through 70, it is giving a sell signal. An RSI below 30 indicates an oversold condition, acting as a warning to the investor to be ready to buy the best set ups. As the RSI indicator rises through 30, it gives a buy signal. This is especially true if the long-term trend is up, as the RSI rises through 30, creating potential entry points. These are bullish indicators regarding a stock's possible future performance. Moreover, most of these stocks are trading well below consensus analysts’ estimates. Several have recent upgrades and positive analyst comments.
There may be more volatility in front of us even with the more than 10% drop in the market recently. Nevertheless this may be a good point to start a position in these buying opportunities. As Warren Buffett says, “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” Six large cap or better stocks that are oversold based on the current RSI indicator and have substantial quarterly EPS growth rates of greater than 30 percent are Apache Corp. (APA), FedEx Corporation (FDX), Norfolk Southern Corp. (NSC), BB & T Corp. (BBT), Ivanhoe Mines Ltd. (IVN) and Agilent Technologies Inc. (A).
Below is a table with detailed statistics regarding each company’s current Earning per Share and Dividend information followed by a brief review of each company, detailed current analysts' estimates and up/downgrade activity followed by a chart of the company's key statistics. Please use this as a starting point for your own due diligence.
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Apache Corp., together with its subsidiaries, engages in the exploration, development, and production of natural gas, crude oil, and natural gas liquids. The company is trading significantly below analyst estimates. Apache has a median price target of $147.50 by 22 brokers and a high target of $170. The last up / downgrade activity was on Mar 8, 2011, when Argus upgraded the company from Sell to Hold.
FedEx Corporation provides transportation, e-commerce, and business services in the United States and internationally. The company is trading below analysts' estimates. FedEx has a median price target of $114 by 24 brokers and a high target of $136. The last up / downgrade activity was on Feb 3, 2011, when Robert W. Baird upgraded the company from Neutral to Outperform.
Norfolk Southern Corporation, through its subsidiaries, engages in the rail transportation of raw materials, intermediate products, and finished goods primarily in the United States. The company is trading significantly below analysts' estimates. Norfolk has a median price target of $86.50 by 26 brokers and a high target of $94. The last up/downgrade activity was on Apr 18, 2011, when BB&T Capital Markets upgraded the company from Hold to Buy.
BB&T Corporation operates as the financial holding company for Branch Banking and Trust Company that provides banking and trust services to small and mid-size businesses, public agencies, local governments, and individuals in the United States. The company is trading significantly below analysts' estimates. BB&T has a median price target of $30.00 by 30 brokers and a high target of $35. The last up/downgrade activity was on Apr 25, 2011, when Oppenheimer downgraded the company from Outperform to Perform.
Ivanhoe Mines Ltd. operates as an exploration and development company. The company’s principal mineral resource property is Oyu Tolgoi copper-gold-silver project located in southern Mongolia. The company is trading significantly below analysts' estimates. Ivanhoe has a median price target of $22.39 by 3 brokers and a high target of $37.59. The last up/downgrade activity was on Jun 10, 2009, when BMO Capital Markets upgraded the company from Market Perform to Outperform.
Agilent Technologies, Inc. provides bio-analytical and electronic measurement solutions to the communications, electronics, life sciences, and chemical analysis industries in the United States and internationally. The company is trading significantly below analysts' estimates. Agilent has a median price target of $60.50 by 12 brokers and a high target of $65. The last up/downgrade activity was on Oct 28, 2010, when Stifel Nicolaus upgraded the company from Hold to Buy.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.