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Back in July of last year, I did a series of articles about companies with relatively cheap valuations that were expecting the fastest earnings growth in 2012 (See 1, 2, 3, 4). These companies offered the potential for huge stock gains if earnings estimates were met.

Unfortunately, just as I wrote those articles the global economy went into a tailspin due to the European debt crisis and stock prices collapsed along with the earnings estimates of the majority of those stocks

Now as global stock markets appear ready to head upwards, it seemed like a good time to revisit this list. It is always a good idea to check the outcome of a previous concept. How did the stocks perform? Were earnings estimates met? What about the valuation now?

The general answer is that earnings expectations were horribly off leading to general underperforming of the group. The remaining question though is whether the stocks provide value now.

My general opinion is that the recovery in most of these stocks were just delayed 6 months. The companies still expect fast earnings growth in 2012, but at reduced levels from the original report. Levels that are now just as attractive considering the lower stock prices.

Below is an updated table:

Company (Ticker

Market Cap. ($M)

FY1

EPS

FY2

EPS

Earnings Growth

FY2 P/E

Take-Two Interactive (TTWO)

$1,260

$0.18

$2.51

1,294%

5.8

Patriot Coal (PCX)

831

-1.49

0.26

117

35.0

Manitowoc (MTW)

1,460

0.37

0.94

154

11.7

Accuride (ACW)

350

-0.13

0.73

661

10.2

Meritor (MTOR)

634

0.85

1.34

58

5.0

Terex (TEX)

1,790

0.44

1.64

272

10.0

Carrizo Oil & Gas (CRZO)

1,080

1.17

3.03

159

9.1

Allstate (ALL)

14,680

0.77

3.67

377

7.9

Kodiak Oil & Gas (KOG)

2,020

0.25

0.97

288

9.9

Micron Tech (MU)

7,090

-0.37

0.37

200

19.5

Gold Resources (GORO)

1,310

N/A

N/A

N/A

N/A

GulfMark Offshore (GLF)

1,140

1.85

3.64

97

11.9

Motorola Mobility (MMI)

11,530

0.42

1.18

181

32.6

United States Steel (X)

4,110

-0.04

2.49

6,325

11.5

MF Global (MF)

Bankrupt

SkyWest (SKYW)

676

-0.17

0.89

624

15.0

SMART Modular Tech (SMOD)

Buyout

The clear winner was Motorola Mobility Holdings that accepted a buyout offer from Google (GOOG) though the company lowered guidance. While the overwhelming loser was MF Global (OTC:MFGLQ) that went down in flames in a glorious bankruptcy. As can be seen from the updated earnings estimates, a few of these stocks still stand out as solid earnings plays.

Outside of the buyouts of Motorola and SMART Modular Tech , Kodiak Oil & Gas was the major winner nearly doubling in price. It still remains cheap at only 9.9x forward earnings. Besides Take Two Holdings , it was the only stock to raise earnings estimates for 2012. More importantly though it was the only stock to raise estimates and increase in price.

Other stocks such as Allstate , Gold Resources and GulfMark Offshore had relatively flat results. The vast majority though had earnings cuts followed by stock drops.

The real question remains whether the recovery in the earnings was delayed for a few quarters or are these just bad companies that might be serial disappointments. The proverbial broken stock or broken company syndrome.

In the end, the research remains inconclusive on whether this type of investment theme is profitable. Maybe in another 6 months with a global recovery we'll be able to tell whether these stocks were extremely cheap or analysts were too optimistic.

Source: Fastest Earnings Growth For 2012 Revisited