We are sitting on the "launching pad" of that time of year when fairly valued stocks with outstanding business models and excellent balance sheets are apt to "take off".
The stock market soared last week and is pulling back. It may be a minor, short-term downdraft or it may be deeper and more lasting than many expect.
Stocks We May Be Able to Buy Near Their Early November 2011 Lows
Here we are, a little over two weeks into the month and many of us would be happy to buy more at the intra-day lows we saw in the first week of this month.
You'll notice most of these stocks are leaders or top contenders in their respective industries. Most pay a nice dividend, or are structured to pay out most of their "funds-from-operation" like the MLPs.
The table below (from left to right) shows the names of these companies, their trading symbol, my target prices and the date that this stock last hit that target price.
"Bargain" Companies at Target Prices
|Coeur d'Alene Mines||CDE||$23.78||Nov.1,2011|
* DMLP is a Master Limited Partnership
** SNY was touted on Jim Cramer's show last week on Nov.9, 2011
***CHL provides mobile telecommunications and related services primarily in Mainland China. At $47.33 the yield would be almost 3.9%.
Ford Motor (NYSE:F) is the one "bargain" on the list that makes me nervous. Although they're only selling at around 6 times present and future earnings, they're mired in deep debt.
That said, they have over $5 in total-cash-per-share (mrq) and over $14 billion in levered free cash flow (ttm). So a future dividend may be possible.
Seeing Ford's 1-year chart (plus their 50 and 200-day moving averages) one can see that the 52-week low of $9.05 (intra-day) hit bottom on Oct.4, 2011. Look at the chart below and ask if that low might be retested and if so whether it is wise to wait.
To this list we could add a number of other domestic and international stocks. For example, on Nov.14th I purchased shares of BRF-Brasil Foods (NYSE:BRFS) when it hit my target price of $19.70.
BRFS (Brasil Foods S.A.), through its subsidiaries, produces and sells poultry, pork, beef cuts, milk, dairy products, and processed food products in Brazil and internationally.
You can read a very well written analysis on BRFS here .
Let's Talk Strategy
The strategy here is to pick companies that you're familiar with, understand well, and have excellent fundamentals. Then study their recent "historical prices" and aim to buy on a pull-back to a recent low price or support level.
You probably won't be able to buy them all at your desired price targets, but you will most likely buy some of them. Hopefully this time of year you'll quickly see the stock price rally off the correction price from where you purchased it.
Savvy investors are very picky about what price they're willing to pay for any company or asset. They also "hedge their bets" by buying on dips during traditionally good periods for the market. They may also use option strategies to protect on the downside.
Most of the stocks mentioned above pay dividends, and depending on how long you hold the stock, the dividends that you receive can be added to your gains.
This way, when you sell, you can add the dividend and calculate a "total return" on your initial investment. With the list above I believe you'll be pleased and rewarded with most if you buy the shares as low as possible. Good fortune and good luck!
Disclosure: I am long CVX, COP, IAG, SLW, BRFS.
Additional disclosure: I may buy Ford in two "installments". One near current levels and another if it retests its 52-week low.