The past couple of months have been tough for many investors, but most are still looking for opportunities. The market correction has created many new stock bargains, and a number of well-known stocks have dropped 30% to 50% in just weeks. It's a good time to start picking up cheap shares and setting up your portfolio for some big gains in the next 6-12 months.
Even if your stocks are down for the year, it's important to realize that things can turn around quickly. If you buy at or near the recent lows, you could end up just about doubling your money if these stocks hit the price targets set by analysts this year. Here are a number of stocks that have price targets near double their recent lows. Most stocks have popped in the past few days so, wait for down days to pick up some more stocks like these.
Vale S.A. (NYSE:VALE) is trading around $24.58. Vale is a leading mining company and is based in Brazil. The 50-day moving average is $26.14 and the 200-day moving average is $31.09. These shares have traded in a range between $21.14 and $37.24 in the last 52 weeks. Earnings estimates for VALE are about $5.03 per share in 2011 and $4.67 for 2012. VALE pays a dividend of 57 cents per share which is equivalent to a yield of 2.5%.
This stock was trading around $30 in August 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. On August 2, 2011, Dahlman Rose set a price target of $43 per share, and earlier this year Deutsche Bank set a $48 target.
General Motors (NYSE:GM) shares are trading at $22.50. GM is a leading automaker. The 50-day moving average is $22.95 and the 200-day moving average is $30.12. Earnings estimates for GM are just over $4.40 per share in 2011 and $4.61 for 2012, so the P/E ratio is only about 5.
The fear for some investors is that the U.S. and the global economy is about to fall into another major recession. A significant global economic downturn would impact GM, but the stock seems to be pricing in a lot of bad news and fear already, with it trading for about 5 times earnings. On August 15, 2011, Ticonderoga upgraded GM shares to a buy and set a $42 price target.
United Continental Holdings Inc., (NYSE:UAL) shares are trading at $19.77. United is a major global airline. The 50-day moving average is $18.65 and the 200-day moving average is $22.3. UAL is estimated to earn about $3.66 per share in 2011 and $5.11 in 2012. This puts the PE ratio at just over 5. Book value is listed at $5.80 per share.
Oil prices have been dropping, and that is a huge plus for lowering the fuel costs of this major airline. A recession will lower fuel costs even more, and that will act as a counter-balance if revenues come in lower. Earlier this year, UBS set a $36 price target for UAL shares. This stock has been trading around $18 recently, and if you buy on a dip to that level, you could double your money if it hits the UBS price target of $36.
Huntsman Corporation (NYSE:HUN) is trading around $9.95. Huntsman is a specialty chemical company and is based in Utah. These shares have traded in a range between $8.13 to $21.52 in the last 52 weeks. The 50-day moving average is $11.91 and the 200-day moving average is $16.39. 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 been dropping over concerns that the economy is going into a recession. HUN pays a dividend of 40 cents per share, which provides a yield of 4%. Earlier this year, UBS set a $23 price target.
Goodyear Tire (NYSE:GT) shares are trading at $11.44. Goodyear is a major tire manufacturer. The 52-week range is $8.53 to $18.83. The 50-day moving average is $11.44 and the 200-day moving average is $14.26. 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 even if the economy softens in the next couple of quarters, any weakness should only be temporary. Earlier this year, Deutsche Bank set a $24 price target.
Whirlpool Corp. (NYSE:WHR) shares are trading at $55.99. Whirlpool is a leading maker of appliances. The 50-day moving average is about $56.36 and the 200-day moving average is about $74.97. These shares have traded in a 52-week range between $47.35 and $92.28. Earnings estimates for WHR are about $10.97 per share in 2011 and $8.26 for 2012. WHR pays a dividend of $2 per share, which is equivalent to a yield of 3.7%.
KeyBanc Capital Markets set a $99 price target for WHR earlier this year. It's been possible to buy WHR for about $50 per share or even less recently. I would wait for dips like that to buy, and then hold on for the potential double.
Data is sourced from Yahoo Finance and Finviz.com.
Disclosure: I am long UAL. I might buy all of these stocks soon.
Disclaimer: 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.