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  • 3 Stocks Setting Up To Bounce This Week 0 comments
    Jul 14, 2014 3:10 PM | about stocks: MBI, ARLP, AGCO
    3 Stocks Setting Up To Bounce This Week

    The S&P 500 reported its worst weekly performance since April last week as traders grew concerned of a bank default in Europe.

    Shares in Portugal's second largest bank Espirito Santo sank around 17% before trading in the shares were halted at the exchange. That sent volatility up across the board and sparked a flight to safe haven assets. Calm did return towards the end of the week and with earnings season about to get started, equity traders will be looking for some good value opportunities.

    These three stocks are looking oversold and setting up for a nice bounce over earnings season.

    Agco Corporation (NYSE:AGCO)

    Agco Corp is a global leader in the design, manufacture and distribution of agricultural machinery with a market cap of just over $5 billion. Agco sport a wide range of products including the Challenger, Fendt and Massey Ferguson brands which are distributed through 3150 dealers in more than 140 countries.

    Shares in Agco Corp are looking oversold having dropped over 9% so far this year. Daily RSI is low with a reading of 36.34 and value-wise the stock looks cheap too, trading at forward earnings of just 10.23 with a PEG of 0.95.

    Alliance Resource Partners (NASDAQ:ARLP)

    ARLP shares were hitting new 52 week highs just a couple of weeks ago but have since pulled back towards the bottom of their channel and long term trend line.

    Alliance Resource Partners are the third largest coal producers in the Eastern USA and sold 38.8 million tonnes of coal in 2013. The company is in great financial condition with a current ratio of 1.30 and ROE of 42%. Furthermore, ARLP has been able to grow EPS at nearly 25% over the last five years, despite the lacklustre price performance of coal itself. The company is cheap at just 9.52 forward earnings with a PEG of 0.69 and also pays a healthy dividend of 5.47%.

    (click to enlarge)

    MBIA Inc (NYSE:MBI)

    Property and insurance provider MBIA shares have been in freefall lately sinking from $13 to $9 a share in just a couple of weeks. That has made the stock one of the most oversold on the NYSE with a daily RSI reading of just 16.60.

    The shares have been heavily sold over concerns surrounding the company's exposure to the Puerto Rican bond market as the Puerto Rican government struggles with debt repayments. Buying MBI is not without risk but if we get any good news next week, the stock is likely to bounce sharply from these low levels. Stops should be kept tight so as to avoid the prospect of further losses.

    Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in MBI, ARLP, AGCO over the next 72 hours.

    Themes: day trading, mbi, arlp, agco Stocks: MBI, ARLP, AGCO
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