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Some people associate cheap with an inferior product or service. Though this may be the case in certain circumstances, sometimes investors will find just the opposite with certain stocks. Many undervalued companies are priced cheaply as a result of poor past performance, a bleak outlook or some combination of the two. Our job as investors is to predict the future. We must ask: Can the company bounce back and produce additional wealth? Investors should consider the following five companies as possible buy ideas on this basis: Research in Motion (RIMM), Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), eBay Inc. (NASDAQ:EBAY), and Hess Corporation (NYSE:HES).

Research in Motion

The company is currently trading near $17 a share, just off its 52-week low of $13 a share, and down almost 80% from highs of $70. In 2008, the company was trading as high as $140 a share and the dramatic decline in stock price and earnings has labeled the company as a "has-been" in the minds of many investors.

First, the company has $1.3 billion of cash on hand and no debt outstanding, so the threat of bankruptcy is not an issue. Conversely, the company has performed poorly throughout the last two years, and continuously losing market share to Apple's iPhone and Google's (NASDAQ:GOOG) Android based phones. On the bright side, the company has not performed so poorly globally. In fact, the Blackberry phone remains fairly popular in Western Europe. Nevertheless, Western European consumers are insufficient to sustain Blackberry's once impressive earnings.

The company recently replaced its two Co-CEOs with COO Thorsten Heins, who has plans to grow the company domestically. If the company can successfully introduce new mobile products including growth in its tablet PC, I believe the current price offers a reasonable entry point. Research in Motion currently has a book value per share of $19.77, and the company is trading at a record low price-to-earnings ratio of 4.25.

Apple Inc.

The decline of the Blackberry in the United States can be attributed to Apple's iPhone. The iPhone has become the most used cell phone in the US. Furthermore, the company also sells the iPad, its tablet PC, MacBooks, and iPods. The company recently blew away analyst expectations for Q1 2012, and reported revenue growth of 73% and earnings growth of 118%. Subsequently, the share price climbed 7% and is currently trading near $448. Nevertheless, the company is still undervalued and trading relatively cheaply.

Shares are trading at trailing price-to-earnings multiple of 13 compared to the industry average of 15.2 and Google's price-to-earnings ratio of 19.5. Like Research in Motion, the company does not have any debt outstanding. Additionally, the company has total cash of $30 billion on hand. Apple is not a one-trick pony, as the company also saw growth in sales of the iPod, iPad and Macbooks during Q1 2012. Investors should consider acquiring shares of Apple now. With such momentum, the company looks likely to beat analysts' consensus of 44% growth in the second quarter.

Amazon.com, Inc.

Shares of Amazon are currently trading near $196 a share, down 20% from their 52-week high of $246 and up 22% from their 52-week low of $160. The current consumer environment appears to be ideal for Amazon as cost-conscious customers turn to online retailers in search of the best deals. However, while revenues have grown substantially by 44%, earnings in Q3 2011 were down 73% on a year-over-year basis. The company only takes a small percentage of every item sold, and once additional deals such as free shipping are included, Amazon sometimes loses money on specific sales.

Fortunately, Amazon is an innovative company and the introduction of the Kindle and Amazon Prime should provide better margins and improved earnings growth in the future.

eBay Inc.

There's no doubt about it, eBay isn't as popular as it once was. Many of its once loyal buyers and sellers have adopted Amazon as their online resale portal. But things are getting slightly better, and marketplace sales grew by 16% in the fourth quarter of 2011. Over the past two years, declines in eBay's revenue growth have not been as drastic as the declines experienced by Research in Motion, as eBay has an asset that Blackberry lacks: PayPal.

PayPal accounted for 36% of the company's Q4 2011 revenue. In the latest fiscal quarter, total revenue grew 35% and earnings grew 254% on a year-over-year basis. The company also has a very strong balance sheet which includes $5.93 billion of cash and only $2.1 billion of total debt. eBay may not be a company that is discussed much on Wall Street, however with such strong recent earnings numbers and the growth of PayPal, investors should consider buying the company while it is cheap.

Shares of eBay are trading just above $32, down from their 52-week high of $35 a share and up from a low of $27. Shares are currently trading at a trailing price-to-earnings of 13. In comparison, the industry average is 18.4.

Hess Corporation

2011 was a difficult year for the company as shares fell 34%, however the price decline has only made shares even more attractive to investors bullish on the oil and natural gas industry. Shares are currently trading at a trailing price-to-earnings multiple of 9.8, slightly below the industry average of 10.15. The company is trading at a forward price-to-earnings multiple of 6.9, much below the industry average. The average of 15 analyst estimates is a target price of $80. Shares of Hess are currently trading at $57.

Despite the decline in stock price, Hess is positioned for growth. The company is currently exploring oil-rich regions in Africa, Latin America and offshore Australia. Moreover, the company's current output is below capacity at 700,000 barrels a day. The company believes that it can achieve output levels of 1.5 to 2.0 million barrels a day within seven years. Therefore, I believe investors should consider purchasing Hess now and holding the company for the long term.

Source: 5 Solid Long Ideas