Jubaks-10 cheap stocks..
I'm also going to give you a list of the 10 best low-priced stocks from my idea box. I haven't finished researching each one, so these are more recommendations for further research than recommendations to buy. But I think there's potential in each one. Dismiss them if you like, but do it with a smile, pardner!
Asia Pulp & Paper (PAP) knows that the only thing tougher than being a paper company this year has been being a paper company doing business in Asia. What good does it do being the lowest-cost producer in the world, when demand has collapsed? This one will turn around when Asia does, and that may still take a while. But with more than $11 a share in book value, there's not much risk in this stock, either.
CardioThoracic Systems (CTSI) hasn't found it easy to be a pioneer, but the company's chart now shows a heartening U-shaped turnaround. CardioThoracic Systems is set to introduce nine new products at this week's annual meeting of the Society for Thoracic Surgeons, and could see some black ink in this year's fourth quarter. The stock has moved up strongly but is still well below its 1996 IPO price of $20.
Davox (DAVX) has faced a truly horrible set of quarter-to-quarter earnings comparisons this year, and it now looks like earnings for 1998 will be a full 50% below those for 1997. The stock seems to have found a bottom near $5, however, and it won't be hard for 1999 to look better than 1998.
General Magic (GMGC) has a hot niche: software that lets a phone access the Internet. It also has great partners in Sony (SNE) and Microsoft (MSFT), the owner of MoneyCentral. So what's the problem? Maybe investors have become convinced that despite the company's great technology, General Magic isn't ever going to sell anything. Still, product announcements from its partners do move this stock. It's now flirting with its 50-day moving average.
Global Marine (GLM) is just one of the companies in the oil-drilling and service industry that could have made this list. But with the turnaround in the industry still way, way off -- day rates for drilling rigs are still falling -- I prefer the stock of a company that's strong enough to survive a very tough 1999.
Grupo Iusacell (CEL) is one of the biggest and best-run wireless companies in Mexico. Bell Atlantic (BEL) owns 42% of the company and recently took over management. Of course, given the Brazilian currency crisis, being near the top of any industry in Mexico doesn't strike most investors as worth very much. The stock is now just below its 50-day moving average.
Harnischfeger Industries (HPH) has been hammered by the collapse of markets in Asia for its paper-making machinery. The most recent big blow came when Asia Pulp & Paper walked away from a big order. This stock won't move up until Asia does. But the 52-week high is $37 and the company is a dominant global player.
Itron (ITRI) has been stinking up the joint. It's projected to show a loss of 18 cents a share for this year, and with Itron's recent record of negative surprises, don't be surprised if it's worse. Still, the toughest quarters could be behind the company and the stock has built a solid base at $7.
Pegasystems (PEGAE) couldn't be more down and out -- the stock has earned a relative strength rating of one over the last three months. But underperforming virtually the entire stock market is about what a company can expect when its auditors resign to protest how it reported sales and earnings. New CFO Richard Goldman has torn apart the books over the last few quarters, pretty much destroying the company's growth record. Count on another rough quarter or two and then look for some light at the end of the tunnel.
Trimble Navigation (TRMB) hasn't been able to hit its earnings targets in 1998, and there's nothing like a string of disappointing quarters to kill a stock. Analysts are looking for a turnaround in 1999, but despite the positive forecasts, the stock has barely moved off its 52-week low. That's usually a sign that management has blown its credibility with Wall Street. The stock probably won't move until the company produces a "show me" quarter.
Happy trails to you.
Details
--------------------------------------------------------------------------------
Company Report
1-yr Chart
Financial Statements
Updates
New Developments on Past Columns
Dow 9,800 by year-end?
Fortunately, my pick of Electronics for Imaging (EFII) has worked out better than my prediction for the Dow Industrials. Electronics for Imaging is up about 29% since I wrote this column -- and it looks like better things are still ahead for the stock. The company beat analysts' earnings estimates by 8 cents a share (30%) when it reported Jan. 20. Just as important at a time when analysts are downgrading stocks with great earnings but tepid sales, revenue at Electronics for Imaging came in 5% ahead of forecast on the strength of the company's completely overhauled product line. I think analyst estimates for 1999 at $1.29 are now about 5 cents a share too low. I'm upping my Jubak's Picks June 1999 price target for the stock to $45 a share from the current $42.
Details
--------------------------------------------------------------------------------
Company Report
1-yr Chart
Financial Statements
Hats off to market cap
I wish the news from Whole Foods Market (WFMI) was better, but a Jan. 13 earnings warning was a major disappointment. The company told analysts it would report earnings of 45 to 50 cents on Feb. 16, instead of the 58 cents most analysts were expecting. The stock fell $10 a share to $34.50 the next day. Costs are the problem. Labor costs at the company's stores have climbed, and it has been spending more than anticipated to get its computer systems ready for 2000. Those problems are likely to take a $6 million bite out of earnings in the quarter. That wouldn't have taken the stock down so heavily if management hadn't also disappointed Wall Street in the last two quarters. The Street has now concluded that management isn't firmly in control and has decided to cut multiples for the stock. I'm cutting my Jubak's Picks price target for September 1999 to $46 a share. At current prices in the mid-$30s, I don't think there's much risk in the stock and with revenue growth still on track, I think the company's problems are fixable.
|
