Uncovering Hidden Gems: Four Stocks That Could Soar
The following Stocks are incredibly undervalued.
In my younger, more impetuous days I’d be buying them.
However, I have learned from experience (and pain) to wait till an undervalued stock has based and is attempting to enter a an uptrend before purchasing them. Two stocks are ready to be purchased. Two need more time.
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They are definitely worth watching as the upside is tremendous.
Big Five Sporting Goods : BGFV $8
I’ve been watching this one for awhile and it keeps going lower. Retail is out of favor. But it has low debt, consistent profits / cashflow and a big yield.
I wish it was more profitable, but it does have double digit return on equity. They’re buying back shares with the extra cash flow.
Significant upside with minimal risk. I’d like to see it enter a new uptrend before buying.
Gap Stores: GPS $12.20
Operates 2695 stores locations under Gap, Old Navy, Athleta, and Banana Republic brands Worldwide.
Another out of favor retailer. It appears that it has entered an uptrend and is worth buying.
Second Quarter Earnings:
Their net cash from operating activities was $528M. Free cash flow was $329M. They managed to reduce inventories by 29% compared to last year.
American Eagle: AEO $18
Operates 1100 American Eagle Outfitters and Aerie clothing stores in the US and Internationally.
Lots to like here. Low debt, rebounding earnings, and solid cash flow.
Management is looking to return capital to shareholders (see below).
Invesco Mortgage Capital: IVR $7.94
Invests in finances and manages residential and commercial mortgage backed securities and mortgage loans.
High risk / high return on this Real Estate investment Trust. The stock is still in a definitive downtrend, so its too early. However, I am watching this one.
There is so much pessimism on commercial real estate that the contrarian in me cant help but see if there is money to be made. I would consider adding shares once a definitive bottom has been made and it begins a new uptrend.
This could still be a couple months away.
In conclusion, these names are tremendously undervalued. Gap and American Eagle are in uptrends and can be purchased now (use a 10% stop).
The other two are still on my watch list because they are still in downtrends.