Today, I am analyzing five stocks that could double in price shortly based on their financial performance and currently attractive low prices.
My analysis includes a maker of networking and communication devices, a semiconductor manufacturer, a diversified electronics maker, a communication equipment manufacturer, and a radio broadcasting company. Please use this analysis as a starting point for your own due diligence:
Cisco Systems, Inc. (CSCO) is now scraping along the bottom of its five-year price range. By analyzing its price trend, I can conclude that the stock has likely hit bottom. The current total market capitalization of CSCO stock is $91.32 billion. The stock price is trading around $16 now. Also, shares have been traded in 52-week range between $13.30 and $24.60.
Cisco Systems started to pay a dividend for the first time in April. CSCO stock will likely increase its dividend yield like other tech companies have done, perhaps with a large, one-time dividend in the future. Currently its payout ratio is only 10%, with a modest dividend of $0.24 or equivalent yield of 1.5%. However, CSCO stock has a better performance than that of Alcatel-Lucent (ALU) stock. Its earnings-per-share is 1.17. CSCO stock’s price-to-earnings ratio is 14.25 as compared to Hewlett-Packard (HPQ) stock’s low ratio of 5.46. CSCO’s price-earnings-to-growth ratio is currently 1.01, representing a good value for prospective growth. CSCO stock’s profit margin and return on equity are 15.02% and 14.18%, respectively. As CSCO has strong growth prospects, I rate its stock as a buy for investors and especially for retirees. This could be a surprisingly stable dividend payer going forward with the potential for a double.
Advanced Micro Devices, Inc. (AMD) has total market capitalization of $4.98 billion. Currently the stock is being traded around $7 and has been in a 52-week range between $5.60 and $9.58.
Due to an unexpected decline in demand and pricing recently, AMD said that its wireless product sales will account for less than 10% of total revenue. Also, AMD has notable debt considerations. To meet $2.4 billion debt and capital lease obligations, AMD had $1.8 billion in liquid assets in 2010, which is less than that of 2009. Nonetheless, the company is on solid footing because of its cash flows.
AMD generated $4.8 billion and $1.6 billion of net revenue from computing solutions and graphics, respectively, in 2010. Thus, its gross profit margin increased by 4% to 46% in 2010. Currently, it has a mesmerizing return on equity of 69.2%. Earnings per share for AMD stock is $1.12, better than that of Nividia (NVDA) stock but less than Intel's (INTC) $2.18 and IBM’s (IBM) lucrative $12.32. However, AMD stock’s performance can be drawn from its low price-to-earnings ratio of 6.41, the lowest among its competitors. This is why AMD stock is likely to increase in the future, and shares could very well double in price. Thus, I rate this stock as a buy.
Corning Inc.'s (GLW) stock has market capitalization of $21.90 billion now. GLW stock is being traded around $14. The price is currently the lowest in the last few years, and tends to rise from these levels. Shares have traded in 52-week range between $13.11 and $23.43. Corning, with its revenue growth rate of 17.10%, generated $7.30 billion of revenue in the last fiscal year. Its profit margin and return on equity now are at 45.68% and 17.38%, respectively. GLW stock’s payout ratio is 10%, with modest dividend payments of $0.20 and yield of 1.40%.
Current earnings-per-share for GLW stock is 2.11. Although GLW stock’s price-to-sales ratio seems high at 3.0, its price-to-earnings ratio at 6.61 demonstrates the stock’s praiseworthy performance in the industry. Also, its price-earnings-to-growth ratio of 0.65 means that there is significant potential for multiple expansion. Thus, I should credit GLW for a low valuation. I rate Corning as a buy right now.
JDS Uniphase Corporation's (JDSU) total market capitalization is $3.02 billion. The current stock price is around $13, but it has been traded in 52-week range between $9.69 and $29.12. However, I expect the price of the stock will see a price point above $25 by the end of the year.
JDS Uniphase has been criticized for its inventory issues recently, as its inventory growth rate is greater than its revenue growth rate for the trailing 12 months. As a result, it is a potential sign that expected sales have not materialized.
In terms of financial analysis, only the price-to-sales ratio can be used to rate the stock as a solid performer, at 1.71, which is still the highest among its competitors like Avago Technologies (AVGO) and Finisar (FNSR). However, its price-to-earnings ratio of 42.74 is high as compared to AVGO stock’s 16.31 ratio. Once it gets its inventory issues under control, investors will see that the stock is quite cheap now. I rate JDS Uniphase as a buy.
SIRIUS XM Radio Inc. (SIRI) – SIRI stock is traded at around $1.80 now. It has been traded in 52-week range between $1.10 and $2.44. SIRI stock’s total market capitalization is $6.86 billion.
Profit margin and return on equity for SIRI is 8.13% and 70.40%, respectively. Also, revenue generated by the company was $2.92 billion, and quarterly revenue growth is around 6.40%. Its price-to-earnings ratio is not demonstrating its good performance, as it is unexpectedly high at 44 versus Cumulus' (CMLS) stock’s 2.89 ratio. However, SIRI is now seeing a low value assigned to its stock as its price-earnings-to-growth ratio is below 1, at 0.88. Although SIRI, with operating cash flow of $595.40 million, has not paid any dividends yet, the company is likely to be a quite lucrative cash cow as it leverages its operations going forward. Thus, considering this overall analysis, it is clear that SIRIUS XM Radio could double in price shortly, and that’s why I rate it as a buy.