{"id":23753,"date":"2023-10-02T12:57:23","date_gmt":"2023-10-02T12:57:23","guid":{"rendered":"https:\/\/microloannexus.com\/investing\/4-bargain-stocks-with-big-potential\/"},"modified":"2023-10-02T12:57:24","modified_gmt":"2023-10-02T12:57:24","slug":"4-bargain-stocks-with-big-potential","status":"publish","type":"post","link":"https:\/\/microloannexus.com\/?p=23753","title":{"rendered":"4 Bargain Stocks With Big Potential"},"content":{"rendered":"
\n

The harsh market climate of August and September has left quite a few stocks selling for what I consider bargain prices.<\/p>\n

Welcome to the 82nd<\/sup> quarterly Casualty List, featuring stocks that have been knocked around and that I think have the potential to recover and thrive.<\/p>\n

RTX<\/h2>\n

I\u2019ll start with RTX <\/strong>(RTX), formerly known as Raytheon Technologies. It\u2019s a large conglomerate, best known for making missiles, drones, satellites and Pratt & Whitney jet engines. A costly recall on the jet engines sent the stock spinning for a 27% loss in the third quarter.<\/p>\n

One of my mantras as an investor is to buy stock in good companies on bad news that is real but temporary. I think that\u2019s exactly the case with RTX. Pratt & Whitney has a good reputation in the aerospace industry, and I anticipate it will be back on its feet in a year or so.<\/p>\n

<\/fbs-ad><\/p>\n

Meanwhile, the stock is selling for 1.45 times book value (corporate net worth per share), compared to a ten-year average of 1.94.<\/p>\n

I like the defense sector, which generates roughly half of Raytheon\u2019s revenue. Congress is trying to cut spending, but I don\u2019t see how it can chop defense spending much, given the high level of tensions between the U.S. and China, Russia, North Korea and Iran.<\/p>\n

Timken
\n TKR
\n <\/fbs-ticker><\/h2>\n

All sorts of machines use bearings, and Timken has been making them since 1899. It also makes automatic lubrication systems, couplings and universal joints, transmissions, brakes and clutches.<\/p>\n

The company has a large presence in India and sales to Indian Railways accounted for 17% of the company\u2019s revenue in 2022. It also supplies parts for the Mars rover and offshore wind turbines.<\/p>\n

The stock fell more than 20% in the third quarter. In August, Timken announced that it earned $2.01 cent per share in the second quarter, eight cents shy of analysts\u2019 consensus.<\/p>\n

I think that traders put too much emphasis on whether companies beat consensus or not. Timken has grown its earnings at better than a 10% annual clip the past ten years. With the stock selling at 12 times earnings, I think it\u2019s a good value.<\/p>\n

Amkor Technology
\n AMKR
\n <\/fbs-ticker><\/h2>\n

Shares of Amkor dropped more than 22% in the quarter. The stock had been near $30 in July, but the company did a secondary stock offering of 10 million shares in September at $24. Price at the end of September: $22.60.<\/p>\n

The sellers in the September offering were an investment vehicle for the family of James Kim, Amkor\u2019s founder. Even after this sale, the family and its affiliates own a majority of Amkor\u2019s stock.<\/p>\n

Based in Tempe, Arizona, Amkor provides chip testing and packaging for semiconductor manufacturers. Few Wall Street firms cover the stock, and only one (D.A. Davidson) ventures a price target. The target is $36 within a year.<\/p>\n

The shares trade at eight times recent earnings, but the semiconductor equipment industry is volatile. I like the stock, but be prepared for a bumpy ride.<\/p>\n

SeaWorld Entertainment<\/h2>\n

As a speculation, I think SeaWorld Entertainment (SEAS) looks intriguing. The company had a close brush with bankruptcy during (but not totally because of) the pandemic. Now its revenue is above pre-pandemic levels and it has been profitable for two and a half years.<\/p>\n

Shares fell almost 20% in the third quarter, mostly because of a decline in attendance at its parks that the company blamed on extra-hot weather. Revenue was up but profits were down, partly because the SeaWorld ran various promotions in an attempt to boost attendance.<\/p>\n

The shares sell for 12 times recent earnings, and only eight times the earnings that analysts project for next year.<\/p>\n

Performance<\/h2>\n

This is the 82nd<\/sup> quarterly Casualty List I\u2019ve compiled. One-year performance can be calculated for 78 lists and it has averaged 15.3%. That handily beats the 10.4% average for the Standard & Poor\u2019s 500 Total Return index over the same periods.<\/p>\n

My Casualty List recommendations have been profitable 50 times and have beaten the S&P 39 times.<\/p>\n

Bear in mind that my column results are hypothetical and shouldn\u2019t be confused with results I obtain for clients. Also, past performance doesn\u2019t predict the future.<\/p>\n

My list from one year ago gained only 4% while the index advanced 16.6% from October 3, 2022 through September 29, 2023. Losses in Tyson Foods
\n TSN
\n <\/fbs-ticker> and Fulgent Genetics (FLGT) dragged down the return.<\/p>\n

The bright spots were Intel
\n INTC
\n <\/fbs-ticker> and Western Digital
\n WDC
\n <\/fbs-ticker>. Great Lakes Dredge & Dock (GLDD) was close to unchanged.<\/p>\n

Disclosure: A hedge fund I run owns Amkor common stock and call options on Intel and RTX. <\/em><\/p>\n

John Dorfman is chairman of Dorfman Value Investments in Boston, Massachusetts. His firm or clients may own or trade the stocks discussed here. He can be reached at jdorfman@dorfmanvalue.com.<\/em><\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The harsh market climate of August and September has left quite a few stocks selling for what I consider bargain prices. Welcome to the 82nd quarterly Casualty List, featuring stocks that have been knocked around and that I think have the potential to recover and thrive. RTX I\u2019ll start with RTX (RTX), formerly known as<\/p>\n","protected":false},"author":1,"featured_media":23754,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[],"class_list":{"0":"post-23753","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-investing"},"yoast_head":"\n4 Bargain Stocks With Big Potential | Micro Loan Nexus<\/title>\n<meta name=\"description\" content=\"The harsh market climate of August and September has left quite a few stocks selling for what I consider bargain prices. 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