Barron's Roundtable member Archie MacAllaster recommends patiently moving into stocks that are at or near one-year lows. He says the following stocks will be "substantially higher" by year-end.
- Fidelity National Information Services (NYSE:FIS) - the company is splitting into two: lender processing and transaction processing. Together, they are worth $60-65 vs. a current price of $39. Investors fail to understand that the mortgage crisis has increased the lending unit's revenue, as mortgage defaults require more paperwork.
- Hanmi Financial (NASDAQ:HAFC) - Korean-American bank that saw its market cap cut in a third due to mortgage-related earnings weakness. It trades at 30% beneath book value, pays a 3.2% dividend yield, and could be an acquisition target.
- Bank of America (NYSE:BAC) - Chairman Ken Lewis is an old-time banker that is great at implementing change in the face of difficulties. Shares ($39) should hit $55.
- Lincoln National (NYSE:LNC) - writes business and life-insurance annuity products, and manages a lot of money. In past years, shares stagnated due to its then 10-11% return on equity. But now they're earning 13.5-14%. Shares ($54) could hit $70.
- VeriFone (NYSE:PAY) - shares were beaten down to $18 from $50 due to accounting issues. But sales remain strong, and PAY is growing rapidly in Europe. MacAllaster seems to think the markets have over-compensated the accounting issue.
- Chesapeake Energy (NYSE:CHK) - natural gas has a bright futures in the U.S. due to its low price and environmental friendliness. CHK's P/E of 10-11 compares favorably with rivals Devon (NYSE:DVN) and XTO (XTO), which command 14.
- Hartford Financial Services (NYSE:HIG) - 2007 earnings exceeded expectations, yet shares are down. Returns on equity are 18%. Shares ($83) could hit $120 over the next year.