The market pullback in recent weeks has created some opportunities for investors. The amount of fear in the stock market has investors jumping ship to get their money into perceived safer places. This just made a number of cheap stocks become even cheaper. I do not see a double-dip recession happening this year so this is an even better time to buy into stocks. I am looking for stocks that are cheap based on their forward PE ratios with good growth catalysts to improve earnings. These stocks are increasing their dividends and have a Bullish outlook in the next year.
Broadcom (BRCM) provides semiconductors for broadband communications markets, including cable set-top boxes, cable modems, office networks and home networking. BRCM is poised to benefit from some of the faster-growing markets in semiconductors such as mobile, broadband, and network infrastructure. We view favorably its market leadership in key segments such as Wi-Fi, 10G Ethernet, and broadband. BRCM has a forward PE ratio of 10.3 with long-term EPS growth of 14.72%. The dividend was increased 11% for a dividend yield of 1.24%. BRCM has a potential price upside of 39% in the next year. It has an equity summary score of 8.4 out of 10 for a Bullish outlook.
Staples (SPLS) is the leading operator of office products superstores has about 2,300 units primarily in the U.S., Canada and Europe, and also a significant corporate delivery business. We continue to favor SPLS's management, strong balance sheet, and significant cash generation and cost synergies from the Corporate Express acquisition that should accrue over the next couple of years. While the office supply industry is saturated, in our view, we believe SPLS will continue to capture market share from peers. SPLS has a forward PE ratio of 8.5 with long-term EPS growth of 9.8%. The dividend was increased 10% for a dividend yield of 3.29%. SPLS has a potential price upside of 37% in the next year. It has an equity summary score of 7.4 out of 10 for a Bullish outlook.
Baxter International (BAX) is a global medical products and services company provides critical therapies for people with life-threatening conditions. We believe Baxter is well positioned with market-leading status in recombinant products for hemophilia patients, plasma proteins, antibody therapies and degenerative medicine. Despite pricing pressures both in the U.S. and Europe, we see growth in principal franchises over the coming quarters, helped by the launch of new products, acquisitions and expansion in emerging markets. BAX has a forward PE ratio of 10.7 with long-term EPS growth of 7.9%. The dividend was increased 8% for a dividend yield of 2.61%. BAX has a potential price upside of 32% in the next year. It has an equity summary score of 7.8 out of 10 for a Bullish outlook.
St. Jude Medical (STJ) is the leading maker of mechanical heart valves also produces pacemakers, defibrillators, and other cardiac devices. We look for revenues to rise 3.1% in 2012, following 2011's 8.7% gain, as new products offset unfavorable foreign exchange (forex) and the lapping of a 2010 acquisition. Promising new and pending products include wireless monitoring technology for heart failure patients, a pericardial stented tissue valve, and a quadripolar CRT-D. Interesting longer-term projects, in our view, include transcatheter aortic valves, renal denervation, percutaneous mitral valve repair devices, and a left atrial appendage closure system. STJ has a forward PE ratio of 10.4 with long-term EPS growth of 9.5%. The dividend was increased 9.5% for a dividend yield of 2.39%. STJ has a potential price upside of 30% in the next year. It has an equity summary score of 8.4 out of 10 for a Bullish outlook.
Microsoft (MSFT), the world's largest software company, develops PC software, including the Windows operating system and the Office application suite. Our buy recommendation is based on valuation as well as the anticipated upcoming releases of critical higher margin products, specifically Windows 8 and Office 15. We believe MSFT's core businesses remain solid, on healthy enterprise spending, but we remain concerned about piracy issues in high-growth emerging markets. In addition, we see the biggest near-term potential catalyst being the eventual launch of Windows 8, which should help MSFT penetrate the Ultrabook, tablet and smartphone categories. MSFT has a forward PE ratio of 9.6 with long-term EPS growth of 7.91%. The dividend was increased 25% for a dividend yield of 2.73%. MSFT has a potential price upside of 27% in the next year. It has an equity summary score of 8.8 out of 10 for a Bullish outlook.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.