These stocks look cheap from just about every metric. All of them are tied in one way or another, directly or indirectly, to the energy sector, and/or the price of oil. Most have reasonable PE ratios and some are very oversold. In particular, I am looking at book value, earnings and the Relative Strength Index (RSI) levels which can indicate oversold conditions. Stocks with an RSI rating around 30 or below can signal that the shares are oversold and due for a rebound. Stocks with a RSI rating around 70 or more can be considered overbought. To learn more about RSI, read this
Some of these companies are down so hard that they may rebound sharply. Others have been depressed for a while, but could move up soon. Here are the companies:
WSP Holding Ltd.
) is trading at $1.25. WSP Holdings is a leading maker of steel products and pipes for the oil and gas industry. The 50 day moving average is $1.32 and the 200 day moving average is $1.32. WH is a possible turnaround play and recently received a huge order for about $91 million which you can see here
. The book value is reported at $3.40.
Why WSP Holdings shares could rebound: The oil and gas industry is booming and the last time oil was over $108 per barrel, this stock was trading at nearly $8 per share. While I don't expect $8 anytime soon, from these low levels a little good news in their next earnings report (which should be released at the end of May) could catapult this stock much higher. The stock is within striking distance of breaking out over the 50 and 200 day moving average of $1.32. Another big positive sign and vote of confidence is seeing that Oaktree Capital Management, LP. reportedly owns over 7 million shares in this company which is nearly 7% of the outstanding shares. You can see them and other major holders listed here
Beacon Power Corporation (BCON) shares are trading at $1.54. Beacon is a development stage energy company that is producing flywheel energy storage systems. The RSI for BCON is about 24. The 50 day moving average is $2.54 and the 200 day moving average is $2.83. BCON is estimated to lose about 73 cents per share in 2011. Book value is listed at $1.37 per share.
Why Beacon shares could rebound: These shares are trading at close to book value and have plunged to oversold levels in recent days. The drop to these low levels looks like a good time to start accumulating. The stocks seems to have dropped after a reverse stock split and a couple of downgrades. Ardour Capital downgraded BCON shares from buy to accumulate. You can see that downgrade here
United Continental Holdings Inc.,
) shares are trading at $19.67. United is a major global airline, and right now it is a play on energy because the airline sector is currently trading based on the price of oil. The RSI for UAL is about 29. The 50 day moving average is $24.21 and the 200 day moving average is $24.26. UAL is estimated to earn about $4.51 per share in 2011 and $5 in 2012. This puts the PE ratio at just over 5. Book value is listed at $5.27 per share.
Why United shares could rebound: This stock has moved down sharply as oil has moved up. These shares are trading at a major discount to the market in terms of PE ratio. The recent drop to these levels looks like a good time to start accumulating. This airline has been profitable and is expected to remain profitable even with higher oil prices. When the headlines over oil prices improve, these shares can rebound sharply. Almost all airline stocks have been punished in the last several weeks. These share were trading at about $27 in February, and have dropped below $20. Recent option activity indicates that some option buyers are expecting a significant rebound in UAL shares which you can read about here
Hanwha SolarOne Company
(HSOL) shares are trading at $7.38. Hanwha SolarOne is a leading maker of wafers and solar modules and is based in China. The 50 day moving average is about $8.18 and the 200 day moving average is $9.45. Earnings estimates for HSOL are expected to be $1.32 for 2011 and $1.34 for 2012. This stock looks cheap and is trading way below the book value which is stated at $10.70.
Why Hanwha SolarOne shares could rebound: HSOL is just too cheap, based on book value, PE ratio, and growth potential, this stock is almost being given away. HSOL might even be a takeover target because it already has found an interested buyer. This company used to be called Solarfun Power Holdings Co., but they recent changed their name to Hanwha SolarOne after Hanwha Chemical of Korea bought a 49.9% stake in this company last year.
CAMAC Energy, Inc., (CAK) shares are trading at $1.41. CAMAC is a independent oil and gas company, based in New York. This stock has dropped hard in the past few months, from about $2.50, to current levels. The 50 day moving average is $1.61 and the 200 day moving average is $2.51. The 52 week range is $1.20 to $6.07. Book value is stated at $1.35.
Why CAMAC shares could rebound: These shares are trading close to 52 week lows and for just pennies over book value. This company has a very strong balance sheet with about $30 million in cash and basically no long term debt. Insiders have been buying shares
. You can read an operations update and earning release from CAK here.
Broadwind Energy, Inc.
) shares are trading at $1.31. These shares have a relative strength index of 38, which indicates the shares are near oversold levels. BWEN is a leading wind energy company, based in Illinois. The 50 day moving average is $1.58 and the 200 day moving average is $1.99. Earnings estimates for BWEN are at 1 cent per share in 2011, and 8 cents for 2012. The 52 week range is $1.21 to $4.40. Book value is stated at $1.18.
Why Broadwind shares could rebound: It might be a while before this company rebounds, but the shares are worth watching now as they are trading near the lows. This company is still facing a number of challenges, so if you buy BWEN shares, it probably makes sense to buy in stages, or wait to see some insider buying which could be a sign these shares have truly bottomed out.
The data is sourced from Yahoo Finance and Stockcharts.com. The information and data is believed to be accurate, but no guarantees or representations are made. Rougemont is not a registered investment advisor and does not provide specific investment advice. This information is solely educational in nature and not intended to serve as the basis for any investment decision.Disclosure:
I am long WH
. I may buy shares in any of these companies soon.