The markets have declined significantly over the past several weeks. In spite of the big drop we have seen recently, the Dow Jones Index (DIA) plunged about 283 points on Wednesday, and we saw another drop of about 391 points on Thursday. That's a huge loss of nearly 700 points in just two days! Investors have been trying to find safe places to hide out in by staying in cash or investing in gold, dividend stocks and in companies like Apple (AAPL) that can do well even if the economy gets weaker. Clearly, it is tougher to make money in the stock market these days, but there will always be stocks that go up even as the major indexes are plunging. In order to find stocks that can rise in a very negative market, investors need to find "special situation" stocks. A special situation stocks is one like Apple because it has new products and consumer demand that is so strong it can still grow revenue and profits, which means the stock can move higher. Other types of special situation stocks could be companies that are either takeover targets or have breakup or spin-off potential. Here is a closer look at a number of special situation stocks that could double or more in the coming year:
Janus Capital Group (JNS) is a leading asset management company. This stock was trading around $9.50 per share in July and has dropped about 40% in just a few weeks. The stock appears to be oversold and the company could be primed to be a takeover target by a larger asset management company, especially since it is trading below book value and for a lower price-to-earnings ratio than most of its peers. This low valuation and takeover potential makes it a special situation stock.
Here are some key points for JNS:
Current share price: $5.97
The 52-week range is $5.80 to $14.57
Earnings estimates for 2011: 82 cents per share
Earnings estimates for 2012: 75 cents per share
Annual dividend: 20 cents per share, which yields 3.1%
Book value: $6.67 per share
Current share price: $5.97
The 52-week range is $5.80 to $14.57
Earnings estimates for 2011: 82 cents per share
Earnings estimates for 2012: 75 cents per share
Annual dividend: 20 cents per share, which yields 3.1%
Book value: $6.67 per share
Wells-Gardner Electronics (WGA) is a leading maker of color video monitors for a variety of markets such as gaming machine manufacturers, casinos and coin-operated video game manufacturers. This is a special situation stock because the state of Illinois recently approved new video gaming terminals statewide and just a few weeks ago granted Wells Gardner one of the first distributors licenses. This new market is expected to nearly double revenue for this company in 2012, and that could lead this stock to more than double from current levels. This new product line makes this a special situation stock but it could also be a takeover target by a larger gaming machine maker like International Game Technology (IGT) or another gaming machine maker looking to buy before the new gaming terminals launch in 2012.
Here are some key points for WGA:
Current share price: $2.33
The 52-week range is $1.68 to $2.97
Earnings estimates for 2011: about 25 cents
Earnings estimates for 2012: about 50 cents
Annual dividend: A stock dividend of 5% is paid, which means if you own 100 shares, you will receive 5 more shares each year.
Current share price: $2.33
The 52-week range is $1.68 to $2.97
Earnings estimates for 2011: about 25 cents
Earnings estimates for 2012: about 50 cents
Annual dividend: A stock dividend of 5% is paid, which means if you own 100 shares, you will receive 5 more shares each year.
Book value: $1.37 per share
Freeport-McMoRan Copper and Gold (FCX) is a leading exploration and mining company seeking to produce resources like gold, silver, copper, cobalt and other minerals. This stock was trading around $56 per share just a few weeks ago, but the market correction and concerns over a global recession caused the stock to drop by almost 50%. Copper prices can be very volatile and have been dropping because it is widely used in construction. The demand for copper will probably decline in the coming months and that is why the price has been dropping. However, in the long run, demand should rebound and prices for gold and silver remain strong. This stock is likely to rebound over time, but it could also be a takeover target at this low level, which would make it a special situation stock.
Here are some key points for FCX:
Current share price: $32.14
The 52-week range is $30.97 to $61.35
Earnings estimates for 2011: $5.91 per share
Earnings estimates for 2012: $6.11 per share
Annual dividend: $1 per share, which yields 2.6%
Book value: $15.30 per share
Synovus Financial Corp. (SNV) is a regional bank with operations in Georgia, Alabama, South Carolina, Florida, and Tennessee. This stock was trading in the $2 range just a couple of months ago. An investor with patience could see a turn around in 18 months to two years from now. Synovus can rebound back over $2 in time, but it has also been considered a takeover target for a larger bank. This takeover potential is what makes this stock a special situation.
Here are some key points for SNV:
Current share price: $1.18
The 52-week range is $1.12 to $2.99
Earnings estimates for 2011: a loss of 22 cents per share
Earnings estimates for 2012: a profit of 13 cents per share
Annual dividend: 4 cents per share, which yields 3%
Book value: $2.47 per share
Apple Computer, Inc. (AAPL) is a maker of the popular iphone, ipad, Mac computer and more. Consumer demand remains strong for every product made by Apple. I would not be surprised to see Apple beat the current earnings estimates shown below, especially with the holiday season and new product launches like the Iphone 5 coming up soon. It may take Apple a while to double, but it can if management continues to perform. I think Apple could trade around $500 during the holiday season this year and could even move higher if Apple were to announce a stock split. Apple's new products and the extremely strong consumer demand for anything that is Apple makes it a special situation stock.
Here are some key points for AAPL:
Current share price: $401.82
The 52-week range is $275 to $422.86
Earnings estimates for 2011: $27.49 per share
Earnings estimates for 2012: $32.29 per share
Annual dividend: none
Here are some key points for AAPL:
Current share price: $401.82
The 52-week range is $275 to $422.86
Earnings estimates for 2011: $27.49 per share
Earnings estimates for 2012: $32.29 per share
Annual dividend: none
Book value: not available on Yahoo Finance
JinkoSolar (JKS) is a leading maker of solar products in China. This stock was trading over $20 per share in July, and has since plunged due to a market correction, a highly negative outlook for solar stocks, and news that came out recently about a possible pollution issue from a JinkoSolar factory, which caused it to be idled temporarily. This stock is not for the faint of heart, but it is a special situation stock that could double as concerns over solar and the pollution allegation are cleared up.
Here are some key points for JKS:
Current share price: $6.10
The 52-week range is $5.41 to $41.75
Earnings estimates for 2011: $4.33 per share
Earnings estimates for 2012: $2.94 per share
Annual dividend: none
Current share price: $6.10
The 52-week range is $5.41 to $41.75
Earnings estimates for 2011: $4.33 per share
Earnings estimates for 2012: $2.94 per share
Annual dividend: none
Book value: $21.30 per share
Data sourced from Yahoo Finance. No guarantees or representations are made for accuracy.
Data sourced from Yahoo Finance. No guarantees or representations are made for accuracy.
Disclaimer: Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
