What are the three most undervalued stocks on the market?

Question

What makes them undervalued?

I'm curious to see what people think, not looking to dump my money in a stock based on your avatar's smile. If I wanted Mutual Funds info, i'd ask that question. I used to work at MFS in Boston, so i know where to put my money, and have a strong earning portfolio that is diverse as Angelina Jolie's kids. Thanks taranto for your pompous and long winded answer!

Answer 1

DELL, TM, EEP are undervalued because they are worth more than their current price.

Answer 2

If you are asking that question in this forum, you are obviously a naive investor. You should avoid buying individual stocks and put your money in a no-load mutual fund.

The fact is that if anyone knew of a stock that was undervalued, they would buy it & that would bid up the price, making it less likely to be undervalued for later investors.

Academic studies show that new information gets imbedded in prices almost immediately. That means that if someone tells you here that there is good news for a company, that good news is already priced in.

The only way to beat the market on a regular basis is to have private information. There are three ways to get private information. One is to have insider information (which is usually illegal to use in trading). One way is to pay for it -- taking away the advantage. The third way is to gather up all public information on your own & glean information from it -- leading you to realize the private information that causes the public information. In other words -- use fundamental analysis. Since there are other people doing this analysis on big firms -- the payoff isn't going to be high, since they will probably get the information before you.

That means that profits are to be made in smaller firms where no analyst is covering the company. You can be the first to learn what the public information means. Unfortunately, doing this involves a skill and knowledge that most people don't possess. And it is certainly a knowledge that you aren't going to get asking here.

No load mutual funds are your best bet.

Answer 3

Unlike Taranto I'm not a fan of the efficient market hypothesis; however I would agree with him that, unless an investor is willing to do through a great deal of effort to both learn about investing and research the individual companies in which he invests, he is probably best off investing in no load S&P 500 mutual funds or exchange traded funds (Vanguard funds for example, or SPDRs such as SPY or I V V). But still in the spirit of the question:

Omnivision Technologies (OVTI)
Makes the image sensors that make cell phone cameras (among other things) work. The company trades at 11.5 times last year's earnings and, with a market cap of $978m has $359m in cash and less than a $0.5m in debt. The company returned 21.5% on its equity last year. The market for cell phones is expanding rapidly worldwide and the proportion of phones that include cameras is also increasing, meaning that the company's basic market should expand quite rapidly in the near future. Image sensors are also beginning to appear in automobiles, children's toys and in medical devices, creating potentially lucrative secondary markets for the company's products. The company also owns the rights to a technology called Wave Front Coding which both increases the depth of field (the area of a photograph that is in focus) and reduces the physical size of chips, which is useful in cramming them into ever small cell phones. This technology is just now being incorporated into the company's products and will hopefully give it a substainable competitive advantage in the future.

The company's low earnings multiple is probably the result of the concerns over competition from other companies (principally Micron Technologies: MU). However I suspect that cell phone manufacturers will continue to include more powerful chips in their phones for the forseeable future, and that this should butress prices and allow the company to increase earnings for the forseeable future. I'd put it's fair value at somewhere north (possibly far north) of $30/shr. It also releases earnings next Thurs.

Note that I accept no responsibility if you should actually invest in this company and it should go belly up. I am merely giving you my own opinion and I could certainly be wrong. The only guarantee I can give you is that I own stock in this company.

Answer 4

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Answer 5

JMHO

Cramer indicated a good energy longterm play is RTK. They have a retrofitting process to use Fischer Tropsch refining to convert Coal to Liquid for Oil and NGas to Liquid feedstocks, where the break even is around $28.00/bbl.

Current price is about $5.00, uptick has been good for the last several quarters. Potential price unknown.
Cramer had the CEO on his CNBC program recently, also federal proposed legislation is on the table to open this field wide open.

As the process has been proven it's only a matter of stockholders and consumers pushing it from the national security perspective...

Glenn Beck had the representative of Jet Blue on his HNN program discussing the CTL process without naming Rentech. Pennsylvania's governor is Hot to trot on it because of the known coal reserves in PA..
http://www.glennbeck.com/2006ads/Consumers%20Transportation%20and%20Energy%20Security%20v%206-20%20_2_.pdf

http://www.glennbeck.com/2006ads/jbluctl.pdf

http://www.rentechinc.com/

Answer 6

ford, gateway, lear, sirius

the first three stocks have been beaten up recently and are bound to rebound

sirius is the future