Jared Schneider's  Instablog

We've all enjoyed a good rally in the past couple weeks, but where are the stocks that have been knocked down so badly that the potential profits are mind-blowing?

A few weeks ago I had my eyes on Office Depot, Inc. (ODP) priced at nearly $0.70. On April 16th, 2009 the price is $1.94. That's a 177% RETURN!

Take a look at the stock chart from early March to mid-April:

The great thing about this stock is that it still has a lot of upside potential left, even in the short-term because it has been knocked down so far.

The reason why Office Depot's stock was (and still is) so cheap is because they took a huge write-down on impaired assets four Q4 2008. I would bet that they decided to take these write-downs in the midst of all of the financial company write-downs. This way they look really good when things start to turn around in both the stock market and the real economy.

The only problem with this stock is that the company and the office supply industry as a whole has reached a high saturation level, and it is not expected to grow significantly in the next two years.

However, this stock is way undervalued for a solid household name like Office Depot. Compared to its competitors, Staples and Office Max, it is very undervalued, and has huge price discovery potential for the future.

What to take from this stock analysis is that Office Depot (ODP) can be a great short term play if you expect earnings to be dismal for the Q1 2009 results that will be reported on 4/28, and you sell right before. On the other hand, it could also be a long-term (2-4yrs) investment; the stock could potentially go back up to its 52 week high of $14.40!

How would you like to have a 640% return on your investment in 2-4 years? It's possible.

There are very few investments in the world that exist with this kind of return. As I, Warren Buffett, and many other investors believe, this market has presented opportunities of a lifetime.