12 Bounce Stocks for 2008 - Barron's

Depressed shares of some U.S. companies are trading at or near book value, a level that often provides a price floor. Barron's Andrew Bary looks at 12 potential turnaround stocks that may bounce in 2008:

1) American International Group (AIG) - at 1.4x book value and 8x 2008 profits, shares are at historical lows. Shares ($55) could hit $75.

2) Bear Stearns (BSC) - shares ($80) are below book value ($84). If Bear adapts to the current environment, shares could hit $100, and it could become a takeover target.

3) Comcast (CMCSA) - trades at just $3,000/customer, down from $4,000 a year ago. Could be targeted by activist investors.

4+5) Comerica (CMA) and SunTrust (STI) - regional bank shares offer historically high dividend yields (6.2% and 4.9%). SunTrust is a takeover target.

6) Gannett (GCI) - strip away its $17/share TV business, and shares trade at just 5x pretax cash flow for its newspapers.

7) Kohl's (KSS) - despite tripling its store base since 2001, shares still trade at 2000 levels.

8) Legg Mason (LM) - hurt by cash outflows after 2 bad years and SIV exposure, shares trade at just 12x estimated profits, one of the lowest valuations in the industry.

9) Micron (MU) - trades at just 0.73x book value and 0.85x tangible book value. It will rise once the DRAM market gets rational.

10) Southwest Airlines (LUV) - boasts the sector's best balance sheet. Its fuel-hedging has it 80% covered for 2008 at $51/barrel. Shares trade below post 9/11 levels.

11) Starbucks (SBUX) - despite a drop from $40 to $18, profits are still growing at 15% annually.

12) Time Warner (TWX) - one analyst says the $16 shares carry a sum-of-parts value of $21.

Comments

[BxCap:]

Just reading the list made it hard for me to breathe.....Maybe Mohnish Pabrai would like to take a swipe at one of them (remember DFC?), but I don't think it's a very good idea considering none of these stocks are involved with oil, energy, industrial infrastructure, or minerals.

2008 Jan 06 10:54 PM

[Larry Teller:]

Here are five more (and rationale) by Dan Weiss.

www.vestopia.com/Blogs...

2008 Jan 07 03:11 AM

[Long-Short Guy:]

How has Barron's track record been recently?

2008 Jan 10 02:13 AM