I remember a scene from a trip I took with my wife to Denver. Our hotel was right downtown, and there was transportation to everywhere we wanted to go, so we decided not to rent a car. Our flight had arrived, but we needed a ride to the hotel. They had a shuttle, but we found ourselves standing on the curb for about 20 minutes, just waiting to be picked up. We were sure the shuttle would come by, it was just a matter of time before it arrived.
There are a lot of stocks that have been beat down during the recent correction that are positioned well for a comeback. Here are some stocks that are the best out there, and look really good at this point, and are just waiting to be picked up. The best stocks will do well at some point. We know they will, it is just a matter of time.
Baidu (BIDU) - Baidu is number one on my list because of their great growth potential. Baidu has built up great product recognition in China, and has a growth rate of around 58%. I considered BIDU a great buy at $130, and now it has fallen closer to $117. I have not changed my view of its growth prospects, and feel it will lead the way when stocks come back. Companies with growth like this are not easy to be found, and this one is at a huge discount. It currently is trading at a forward PE of 18.3, and should go higher.
Eaton (ETN) - Other than having a terrific dividend yield of 3.6%, Eaton has been growing in their electrical sales and various other segments. It just recently acquired Cooper Industrials (CBE) at what I consider to be a relatively cheap price of $11.8 billion in cash and stock. Eaton's price to book ratio has fallen to 1.95, and it should be over 2. Their fair value should be in the $50 range. It should come back, and will just be a matter of when it will come back.
McDonald's (MCD) - McDonald's has consistently been delivering strong earnings, while returning value to investors with its 3% dividend yield. It is currently trading $4 per share below the 50 day SMA, and is due for a bounce. McDonald's continues to show that it is willing to adjust the menu and offer great products at an affordable price. It is constantly adding products that are profitable and popular. It is not afraid to go "outside the realm of fast food" and make it faster than anyone else. Take the addition of all the smoothies, McCafe drinks and parfaits. The prices make it a strong choice in any economy. It should trade back near its high over $100 again at some point.
Broadcom (BRCM) - Despite being a supplier for the popular iPhone, Broadcom's stock price has been taking a beating recently. It is now trading at an estimated 10 forward PE. The demand for its products is there, but there seems to be concern that Broadcom is not able to keep up with the high demand. Look for this stock to bounce back when the market as a whole rebounds.
Boeing (BA) - Boeing is the beneficiary of increased orders of commercial airliners. Their bet on fuel-efficient airplanes seems to be paying off as they continue to compete well with European Airbus. The stock is down around $70, which is $4 below its 50-day SMA. With a 2.6% yield, this would be a good long-term investment and would create a nice basis moving forward
If you can find a nice time to pick one of these stocks up, you will be getting a great stock at a discount. Please be aware of the risks. Europe continues to be in turmoil and could affect the US markets substantially. When the US markets rebound, these stocks are in good position to rally. The leaders have been beat down with the rest of them, but they will lead the rallies moving forward. These stocks are not necessarily a recommendation, but a starting point for you to do your own research and see if these are going to be a good investment for you for the long haul. Please be sure to do research before investing.
