In the last few weeks, the market has seen a significant correction, many investors have lost money and are resorting to panic selling in some cases. The big concern is that the debt crisis in Europe spins out of control, a financial collapse occurs and the global economy sees a major recession, if not a depression. Because investors remember how quickly they lost money in the last financial crisis, many of them would rather sell now instead of seeing a repeat of even larger losses that occurred in 2009. If we do see the European crisis spin out of control, there is no question in my mind that stocks will not be a good investment. However, if the worst case scenario does not play out and all we have is a recession, then the low stock prices we see in the next couple of months are likely to be a solid long-term buying opportunity. I expect that the markets will continue to be volatile and possibly drift lower in the next couple of weeks, followed by a probable year-end rally. We could also see an even larger rally sometime in 2012 as voters look forward to the Presidential elections, the process of which could bring some new ideas on creating growth and a better economy going forward. Here are a number of solid companies with stocks trading for about 50% below the 52 week high (or even lower in some cases), that investors might want to consider buying on dips in the coming months:
Vistaprint (VPRT) shares are trading at $27.14. Vistaprint offers online printing services and products for business. The shares currently trade below the 50-day moving average of $29.96 and the 200-day moving average of $44.42. These shares have traded in a 52 week range between $25.54 and $56.25. Earnings estimates for VPRT are about $1.61 per share. Vistaprint continues to take away market share from smaller companies and there is no reason why this trend won't continue to boost results in the future. Another plus is that insiders have been buying significant amounts of stock recently. You can see the insider buying here: finance.yahoo.com/q/it
Marathon Oil Corporation (NYSE:MRO) is trading around $22.15. Marathon is an oil and natural gas exploration and production company. These shares have traded in a range between $21.58 to $54.33 in the last 52 weeks. MRO is estimated to earn about $3.64 per share in 2011 and $3.96 for 2012. MRO pays a solid dividend of 60 cents per share which is equivalent to a 2.4% yield. The stock is trading below book value which is stated at $23.40. Oil prices have remained relatively strong in the face of weak markets and recession concerns, and part of this is probably due to the fact that oil is considered by many to be a hard asset. I believe MRO is very close to a bottom.
Huntsman Corporation (NYSE:HUN) is trading around $9.88. Huntsman is a specialty chemical company and is based in Utah. These shares have traded in a range between $9.88 to $21.52 in the last 52 weeks. The 50-day moving average is $13.69 and the 200-day moving average is $16.66. Earnings estimates for HUN are at $1.85 in 2011 and $2.24 in 2012. The book value is $8.76 per share. This stock has plunged close to 52 week lows over concerns that the economy is going into a recession. HUN pays a dividend of 40 cents per share which provides a yield of 3.4%. Insiders have been buying repeatedly, Jon Huntsman just bought over $2 million worth of shares. See the insider buying here. I think it makes sense to average into a stock like this since it may not have found a solid bottom yet.
Royal Caribbean Cruises (NYSE:RCL) shares are trading at $22.09. RCL is a major cruise line company, based in Miami. The 50-day moving average is $26.32 and the 200-day moving average is $37.72. Earnings estimates for RCL are for a profit of about $2.89 cents per share in 2011 and $3.37 in 2012. RCL pays a dividend of 10 cents per share which is equivalent to a yield of .5%. This stock was trading around $38 per share in July and has almost dropped substantially since then. Oil prices have dropped and this is a huge benefit for any cruise line. The reduced fuel expenses might more than offset lower occupancy rates in a recession.
Whirlpool Corp. (NYSE:WHR) shares are trading at $50.41. Whirlpool is a leading maker of appliances. The 50-day moving average is about $59.59 and the 200-day moving average is about $76.52. These shares have traded in a 52 week range between $47.35 and $92.28. Earnings estimates for WHR are about $11.21 per share in 2011 and $8.43 for 2012. WHR pays a dividend of $2 per share which is equivalent to a yield of 3.8%. Commodity prices have dropped and this could improve profit margins for Whirlpool.
Goodyear Tire (NYSE:GT) shares are trading at $10.50. Goodyear is a major tire manufacturer. These shares have a relative strength index of about 38 which indicates the shares are oversold. The 52 week range is $9.15 to $18.83. The 50-day moving average is $12.73 and the 200-day moving average is $14.32. Estimates for GT are about $1.60 per share in 2011 and $2.26 for 2012. Lower oil prices will help boost profit margins for Goodyear, and tires need to be replaced sooner or later, so any recession can only slightly delay the inevitable.
Gannett Incorporated (NYSE:GCI) is trading around $9.41. Gannett owns several major newspapers and is based in Virginia. The 50-day moving average is $10.76 and the 200-day moving average is $13.85. These shares have traded in a range between $8.28 to $18.93 in the last 52 weeks. Earnings estimates for GCI are about $5.90 per share in 2011 and $6.13 for 2012. GCI pays a dividend of 32 cents per share which is equivalent to a yield of 3.4%. This stock was trading around $14 in July and has since plunged to current levels. This stock could remain weak for awhile so it only makes sense to average in and buy on dips.
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.