Bring Some Joy To Your Portfolio On The Next Market Pullback

| About: Joy Global (JOY)

The market is trading sideways today after three days of an impressive rally albeit one on low volume. For myriad reasons I believe the next leg of the market is down. However, I also think we are in a trader's market that is probably range bound until we get some clarity on the European situation and worldwide growth. That being said, I am making a list of equities I want to deploy some cash into on the next significant pullback in the market. One stock that definitely makes the list is a cheap mining equipment manufacturer that has had a very challenging 2012 so far, but has brighter days ahead.

"Joy Global (NYSE:JOY) engages in the manufacture and servicing of mining equipment for the extraction of coal, copper, iron ore, oil sands, and other minerals." (Business description from Yahoo Finance)

7 reasons JOY is a solid pick up at $56 a share:

  1. After falling for months on concerns about slowing worldwide growth, consensus estimates for FY2012 and FY2013 have stabilized over the past thirty days.
  2. JOY is oversold at just 7.3 times forward earnings, a sharp discount to its five year average (13.9).
  3. The stock price would have to rise 50% to match the median price target of $84 a share that the 15 analysts that cover the stock have on the shares.
  4. The stock is selling near the bottom of its five year valuation range based on P/E, P/S, P/B and P/CF.
  5. Joy Global has grown revenues and earnings at better than a 11% and 21% annual clip respectfully over the past five years yet the shares are selling at a five year projected PEG of just .41.
  6. Quarterly earnings estimates have come down some 10% over the past three months. Given this I think the company could significantly surprise on the upside when it reports at the end of August, much like heavy machinery brethren Caterpillar (NYSE:CAT) did in late July.
  7. The stock looks like it has bottomed at current levels finally and is ready to move higher (See Chart)

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in JOY over the next 72 hours.