Market corrections can create huge opportunities to buy companies that have great business models with solid growth potential at lower stock prices. Very few stocks have not been affected by the present market turmoil, but even in a tough economy, some companies can still prosper in the long run. These companies have very strong balance sheets, products that are in demand, good management, and strong brands. Companies that have solid business models are often the first ones to see a rebound in the stock price. With the markets acting very weak, it makes sense to buy stocks in stages so you can average in. Here are a few companies that have those characteristics, as well as stocks that could be described as "broken" due to a major pullback in the share price:
) shares are trading at $14.12. GLW makes a variety of products ranging from touch screen glass to fiber optics. The shares have traded in a range between $13.15 to $23.43 in the past 52 weeks. The 50-day moving average is $15.85 and the 200-day moving average is $19.01. Earnings estimates for GLW are about $2 per share in 2011, so the PE ratio is around 7 on these shares. GLW pays a dividend of 20 cents per year, which is equivalent to a 1.3% yield.
Why Corning has a strong business model and a "broken" stock: The consumer demand for televisions appears to be weakening, and that outlook has hurt GLW shares. However, this company has a lot going for it and demand for touch screen glass used in Ipads and other mobiles devices should offset at least some weakness in televisions.
Disclosure: Akamai Technologies, Inc
) shares are trading at $20.50. AKAM is a leading Internet service company that helps accelerate and deliver website content. The 50-day moving average is $25.82 and the 200-day moving average is $37.26. Earnings estimates for AKAM are at $1.55 per share in 2011 and $1.74 for 2012.
Why Akamai has a strong business model and a "broken" stock: AKAM has a strong business model and lots of cash on its balance sheet, but after missing expectations more than once, investors are not willing to pay the same price to earnings multiple,which has caused the stock to drop. Because the Internet is likely to grow in size, the long term outlook should be strong for companies like Akamai. However, I would only average into a stock like this over time because it has not been able to find a bottom.
) is trading around $23.37. Statoil is a leading oil and gas company, based in Norway. These shares have traded in a range between $18.39 to $29.67 in the last 52 weeks. The 50-day moving average is $23.78 and the 200-day moving average is $24.21. STO is estimated to earn about $2.93 per share in 2011 and $3.02 in 2012. STO pays a solid dividend of about $1 per share, which is equivalent to a 4% yield.
Why Statoil has a strong business model and a "broken" stock: Oil prices have declined but still remain at very profitable levels, so earnings should continue to grow for Statoil. Statoil's dividend is generous and easily covered by earnings, so it looks very safe and likely to rise over time. Demand for oil could weaken further in the short run, but in the long run it's far more likely to go higher.
) shares are trading at $11.76. Nutrisystems provides weight loss systems. The 50-day moving average is $13.30 and the 200-day moving average is $15.65. These shares have traded in a range between $11.40 to $22.65 in the last 52 weeks. Earnings estimates for NTRI are 16 cents per share in 2011 and $1.08 in 2012. The dividend is 70 cents per share per year which is a yield of about 6%.
Why Nutrisystem has a strong business model and a "broken" stock: Nutrisystems has a very strong brand name and even in a tough economy people will make weight loss and getting fit a top priority for health reasons.
) is trading at $85.38. These shares have a 52 week range of $68.80 and $116.55 The 50-day moving average is $96.99 and the 200-day moving average is $98.87. Estimates for CAT are about $7.19 per share in 2011 and $9.34 for 2012. Book value is stated at $20.75 per share.
Why Caterpillar has a strong business model and a "broken" stock: This stock rose quickly before earnings were released, and quickly sold off since when Caterpillar announced that the earthquake in Japan had impacted sales. Then the stock dropped further as the market declined. Being that this company manufactures economically sensitive industrial equipment, the stock might drop further, but the company is solid and has a good future due to growing agricultural demand.
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.
I am long GLW
I may buy all of these stocks soon.