By Samuel Hasani
Most stocks tend to fluctuate in price over time. Sometimes, some stocks even trade below or above their appropriate trading price. When you can spot those opportunities in a timely manner, that's when you can make money. Here are seven stocks under $20 that should trade for $30.
Ford Motor Company (F): Ford is currently trading at around $13 per share, having reached a 52-week high of around $19. The stock had a strong 12-month growth is sales and income of 11% and 142%, respectively. In addition, Ford's revenue (TTM) of $134.12 billion is higher than its competitor Chrysler and higher than the industry average, but lower than General Motors (GM) and Toyota (TM). The stock has an annual dividend of $0.20 and a yield of 1.58%.
For had a net loss during three of the last five years and it wasn't until fiscal year 2009 that the stock was profitable after having losses the previous three years. Furthermore, the company has had consistent cash flows over the last five years. The stock has substantially improved its gross margin and its profitability over the last years, thus I think there's a good chance the stock will begin a bullish trend and jump around the $30 range.
USG Corporation (USG): USG had an income increase of 48.5% during the last 12 months. The stock is currently trading at about $13 per share. But years ago, before the real estate bubble burst and the economy went downhill, USG stock traded above $100 per share. The stock has had consistent cash flow and steady but fluctuating revenue.
With a rebound in the real estate market this stock will benefit from an increase in demand in manufacturing and distribution of building materials. From my perspective, the rebound of the economy and real estate market will directly improve earnings for USG, thus it will not take long for the stock to trade higher, closer to $30 per share.
Applied Materials, Inc (AMAT): Applied Materials is currently trading around $12 per share. Revenue has been steady and increasing over the last five years and in the last 12 months sales and income have increased 10% and 106%, respectively. Earnings per share of $1.45 and net profit margin of 18.45% help position the company as having the potential to rebound over $20 per share and reach the $30 mark primarily because cash flow has been growing steadily and sales will improve along with a recovery with the economy. I think the stock will eventually trade at the $30 range because it will have an easier time recovering due to its diversified business portfolio.
Cisco Systems, Inc (CSCO): Cisco is currently trading just shy of $20 per share with a 52-week high of just above $22. Over the last 12 months sales have increased almost 8% while income decreased about 16% during the same time period. The stock has earnings per share of $1.15, a dividend of $0.24 and a yield of 1.22%.
Revenue has been stable and increasing over the last five years and the stock is profitable. Cisco is becoming a major player in the Internet Protocol business primarily with its recent acquisitions of Arch Rock Corporation, newScale Inc. and BNI Video. It will not take long for the stock to trade above $30 as its revenue continues to increase due to acquisitions and new customers all over the world.
News Corp (NWSA): News Corp is a leading diversified media company with earnings per share of $1.02, an annual dividend of $0.19, and a yield of 0.99%. Like most stocks, News Corp tumbled down from about $25 due to the recession in 2008. The stock traded around the same range for almost all of fiscal year 2011 but now seems to be on a bullish trend, technically speaking. In fact, over the last twelve months, sales and income have increased 2% and 18%, respectively. In addition, revenue and profit have been stable or slightly increasing over the last five fiscal years while cash flow has been healthier.
Pfizer Inc (PFE): Pfizer is now trading close to its 52-week high of $22.17 appearing to be on a bullish trend already. In fact, sales increased over 35% during last year. The stock has an annual dividend of $0.88 and a yield of 4%.
More recently, the acquisitions of Icagen, Inc., Ferrosan Consumer Health's business, and Excaliard Pharmaceuticals, Inc. will help the company emerge into new markets and acquire more clients, having a positive effect on its bottom line. I think the market is already beginning to reflect the fact that the stock is already on its way back to $30 per share.
General Electric Company (GE): General Electric has an annual dividend of $0.68, yield of 3.60% and earnings per share of $1.24. Revenue has been decreasing since fiscal year 2008 but cash flow has been increasing for the last five years. The recession obviously had a major impact on revenue and profit but as the economy improves, the stock's performance will get better.
Before the recession hit the economy, the stock was trading at around $40 per share but since then it has been struggling to make a comeback until recently. In my opinion, the stock is slowly on its way to the $30 range, but as with any investment, it takes time and patience to reap the financial benefits.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.