5 Superball Stocks
When stocks fall fast and far, they sometimes set themselves up for remarkable rebounds. The following equities suffered dramatic drops over the past week. With help from the 180,000 members of Motley Fool CAPS, we'll see whether any of them have the potential to bounce back.
It's been a while, but thanks to last week's sell-off, we once again have a chance to stand beneath Mr. Market's silverware drawer in hopes of snagging a bargain. Let's meet today's contenders:
|VimpelCom (NYS: VIP)||(34%)||$10.33||*****|
|Mobile TeleSystems (NYS: MBT)||(31%)||$15.02||*****|
|NVIDIA (NAS: NVDA)||(43%)||$14.90||****|
|Hyperdynamics (NYS: HDY)||(58%)||$3.23||*|
|Tesla Motors (NAS: TSLA)||(11%)||$31.04||*|
Companies are selected by screening on finviz.com for abrupt 5% or greater price drops over the past week. 52-week high and recent price data provided by finviz.com. CAPS ratings from Motley Fool CAPS.
Five super falls -- one superball
Markets enjoyed a big bounce Friday. Sadly, it wasn't big enough, and didn't come quite soon enough, to save investors in more than 2,800 companies from ending the week poorer than they began it. So what went wrong?
In some cases, the answer is: "Nothing, really." (Or nothing but a downgrade.) Upstart electric-car maker Tesla Motors had no bad news to report last week -- or at least none I saw. And yet, unnerved by weak electric vehicle sales at Nissan and General Motors (NYS: GM) , Morgan Stanley, in a fit of guilt-by-association, decided to downgrade Tesla Thursday. Investors followed instructions, and shaved almost 10% off Tesla's market cap that day. Similarly, I found no news at Hyperdynamics to explain the stock's weeklong 20% slide. (Nor the 7% bounceback Friday, for that matter.) Such is the fate of one-starred CAPS stocks: subject to the whim of investor opinion.
Meanwhile, on the other side of the opinion-meter, we saw two five-starred stocks suffer from a fit of political panic last week. Over in Russia, the natives are getting restless. Accusations of fraud at the ballot box have voters demanding a recount in the country's recent parliamentary elections, and investors seem worried that this could turn into a replay of 1991. Or 1905. Or 1917. Or 1993... You get the picture. Revolutions happen, and while I personally don't believe that even a radical change in government in Moscow will cause Russians to use their cell phones less, investors seem to be shorting first and asking questions later.
Fair enough. Russia's a scary place, and I can understand why people who aren't that familiar with the country might be leery of exposure to an ongoing political upheaval. So today, let's focus on a stock opportunity that's only a bit less-well-liked on CAPS -- but a whole lot closer to home.
The bull case for NVDIA
A weak Q4 forecast from chip giant Texas Instruments (NYS: TXN) spooked semiconductor investors Thursday, but here at the Fool, the sell-off that resulted only makes investors greedier to buy cheap chip stocks like NVIDIA. TI forecast or no TI forecast, CAPS member straightcashdawg still likes "the prospects for tablet/smartphone growth overseas."
Meanwhile, ace CAPS investor TSIF reminds us that just last quarter, "NVIDIA beat analysts forcasts" with "GROSS Margins ... slightly above 50% on better sales of the high end Quadro Professional chips."
Foolish final thought
TSIF argues that NVIDIA today "appears undervalued" -- and I agree. The stock sells for 14 times earnings, which on its face makes it look like a bargain based on 15% long-term growth expectations. When you consider further that NVIDIA has $2.8 billion in cash on its balance sheet, with more pouring in the door with each passing day (free cash flow at the company amounts to $818 million, or 28% ahead of reported net income), I'd say the stock not only looks cheap ... but is actually cheaper than it looks.
And I'm putting my (virtual) money where my mouth is. On Motley Fool CAPS, I have racked up a record of 73% accuracy by recommending quality stocks that have hit unreasonably cheap prices. I think NVIDIA is my next big winner -- and so I'm recommending the stock publicly to you today. Will I be proven right? Feel free to follow along (and jeer loudly if I'm wrong).
And if you're looking for more great tech picks, take a look at the Fool's new, free report:The Only Stock You Need To Profit From the NEW Technology Revolution.
At the time this article was published Fool contributorRich Smithdoes not own shares of, nor is he short, any company named above.You can find him on CAPS, publicly pontificating under the handleTMFDitty, where he's currently ranked No. 327 out of more than 180,000 members.The Fool has adisclosure policy.The Motley Fool owns shares of Texas Instruments.Motley Fool newsletter serviceshave recommended buying shares of NVIDIA, General Motors, and Tesla Motors.Motley Fool newsletter serviceshave recommended writing puts in NVIDIA.Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.