5 Stocks That Touched Bottom And Are Now Poised To Double

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Includes: AAPL, BBRY, CSCO, HPQ, LVLT, ORCL, SIRI
by: Richard Saintvilus

Company

Ticker

Percentage

Shares Traded

Current Price

Sirius XM Radio

(SIRI)

Fell 4%

582 Million

$1.70

Cisco Systems

(CSCO)

Rose 1.5%

290 Million

$15.32

Level 3 Communication

(LVLT)

Rose 4.7%

92 Million

$1.74

Research In Motion

(RIMM)

Rose 9.3%

102 Million

$29.18

Oracle Corp

(ORCL)

Rose 7.5%

178 Million

$26.65

Click to enlarge

Sirius XM

For the week Sirius XM fell 4 percent to a price of $1.70 on 582 million shares traded. Sirius XM investors continue to be inundated with a bunch of noise about the stock. Bears wearing “flip-flops” are coming out of the woodwork to proclaim “abandon ship”. But the stock continues to show its resolve and resiliency. As the summer doldrums draws to a close, Sirius XM investors should anticipate a higher rising stock price as the company is now only 4 months away from being free to raise its base subscription price.

On Wednesday investors learned that Sirius was one more step closer towards that endeavor in the Carl Blessing case as U.S. District Judge Harold Baer in Manhattan endorsed the accord in a filing over the objections of some subscribers who had argued at an Aug. 8 hearing that the deal paid them too little and the lawyers too much. Baer wrote the following:

“I have reviewed the settlement’s substantive terms and conclude that they demonstrate sufficient fairness, adequacy and reasonableness,” “The vast majority of class members will benefit in the course of their normal subscription payments.”

This case has been a nuisance for quite some time and if it can finally be closed, it will give the investors one more sense of vindication and the company can start to look forward to the next phase of its operations including the deployment of its satellite 2.0 radios. Tuning out the noise continues to be a challenge for many investors. But it’s not their fault and there continues to be a clear double-standard when it comes to Sirius for those who wish to discuss it in a negative light. But patience here is a virtue and patient investors will once again be rewarded with a stock price well above $2.

Cisco Systems

For the week, Cisco rose 1.5 percent to a price of $15.32 on 290 million shares traded. The company’s turnaround continues to be a remarkable story. After some tough changes by CEO, John Chambers, the company is now looking incredibly fit after reporting profits that beat analysts’ estimates. Excluding some costs, profit was 40 cents a share compared to the expected 33 cents. Sales rose 3.3% to $11.2 billion in the period, which ended July 30, compared with an estimate of $10.98 billion. Maybe Cisco’s success has given me a dose of confidence because I now feel that it may be time for it to take on another venture.

While the market did not take too kindly to HP’s (HPQ) decision to scrap the tablet and possibly its PC business, I think HP’s loss should be Cisco’s gain. Who knows, since it has shown so much success in its server business, maybe acquiring HP’s PC business may now be entirely out of the question.

Level 3 Communications

For the week Level 3 rose 4.7 percent to a price of $1.74 on 92 million shares. Much like Sirius, I remain extremely bullish on Level 3 communications. The company has seen its share price fall dramatically due to the struggling economy. But if one can agree that a particular equity trades with the broader market and succumbs to macro events, which is not reason enough to bail on the stock. Level 3 continues to see significant improvements in its fundamentals. Some of which includes:

  • Continued Core Network Services Revenue Growth.
  • Consolidated Revenue of $932 million.
  • Continued Core Network Services revenue growth; 2 percent sequentially and 6 percent year-over-year.
  • Consolidated Adjusted EBITDA increased to $226 million, or $234 million excluding costs associated with the Global Crossing transaction.
  • Global Crossing transaction expected to close before the end of the year.

After the stock reached $1.69 on August 8, it has risen 13 percent to its recent price of $1.91. It continues to be a race to $2.00 between Level 3 and Sirius. The good thing is it’s a race in the right direction.

Research In Motion

My new favorite stock these days is Research In Motion. For the week the stock climbed almost 10 percent to a price of $29.18. It is clear that the stock has reached its bottom on $21. Investors were a bit surprised when I turned bullish on the company after being a long time bear for several months. I explained it this way, the stock price was just an arm's length away from my short target of $20and seeing how it has bounced off of that price suggests to me that it may be time to take a second look at the stock. I am now bullish on the company and feel that most of the negative news has now been priced into the stock and more realistic expectations have been set regarding its recent struggles.

Oracle

For the week, Oracle rose 7.5 percent to a price of $26.65 on 178 million shares traded. This has arguably been one of its best performances for quite some time. Investors have been disappointed with its recent struggles and simply wanted to know, “what is going on with the company?” The answer is simple. Oracle had developed the Apple (AAPL) “investor performance syndrome;" where beating estimates is not enough, numbers need to be pulverized across the board just to “meet expectations.”

Charles Dickens has told us about the effects of “Great Expectations,” but it seems in the investment community this notion reaches an entirely different level or even establishes a life of its own. Oracle posted solid sales and profit growth when it reported full year results. Its preferred method of growth has been through acquisitions, and the purchase of a large hardware rival in early 2010 boosted this year's results. Shareholders have benefitted handsomely, so it boggles my mind to see how impatient these same investors have become. Being a dominant tech player is at the top of every Oracle mission. So far this year it has not disappointed. At $26 per share, the stock remains incredibly cheap and I continue to have confidence that the stock will reach $40 by the end of the year.

Summary

Calling the bottom on any stock is often very hard to do particularly in such uncertain economic times. But I feel pretty certain in saying that the stocks above have reached such status. Thinking that the bottom has been reached can often present safety net to many investors. This is why it is hard to not consider these companies in a long portfolio. Not only will they now trend in the right direction, but value investors with the patience to ride out some storms should expect each of these stocks to double over the course of the next 12 months.

Disclosure: I am long CSCO, LVLT, SIRI, ORCL, RIMM.