The Cheapest Stocks Around
The market is down. Woe as us, right? Well not if you’ve got some money to invest, because now’s the time to check out some cheap stocks. Luckily the Motley Fool did this so I didn’t have to. Here are their cheap stock finds:
- Coca cola (NYSE:KO) hit 52 week low*
- Northrop Grumman (NYSE: NOC) hit 52 week low*
- Microsoft (NASDAQ: MSFT) lowest PE since 1992
- Hansen Natural (NASDAQ: HANS) stock price has been halved
- Whole Foods (NASDAQ: WFMI) stock price has been halved
- Eastman Kodak (NYSE: EK)
- Electronic Arts (NASDAQ: ERTS)
- General Electric (NYSE: GE)
- Eli Lilly (NYSE: LLY) 23% off a 52 week high*
- AT&T (NYSE: T) 23% off a 52 week high*
So before jumping the gun, you have to look into why these stocks are low. Is is just volatility? The current economic downturn? Or the company itself?
The listed stocks have seen decline due to either rising input costs (Hansen’s, Coca-Cola, GE) a messy acquisition (potentially Microsoft) competitive concerns (AT&T, Whole Foods, Northrop Grumman), regulations (Eli Lilly), or general recession-fueled fears.
The key is to find situations where the stocks have fallen, but the company’s business fundamentals are unchanged or have improved. That’s the key to loving volatility. The Motley Fool recommends Buffalo Wild Wings (NASDAQ: BWLD), who is building a national presence and has seen annual revenue and earnings growth despite rising chicken costs, but is trading 43% off its 52-week high.*
*What does trading __% off a 52-week high mean? It’s just a way of measuring a stock relative to where it was traded in the past year. You can gauge a stock’s performance based on its highs and lows of the past 52 weeks. So “43% off the 52-week high” means that if BWLD was trading at $100 at some point in the past year, it’s now trading at $57. That means it is likely undervalued. It’s helpful to look at this to determine if the stock is low and undervalued (=buy), or high and overvalued (=short). Note that there are many other considerations when assessing a stock, so maybe only put HALF of your savings into Buffalo Wings.