3 undervalued plays
Also, a couple of other well-known names are facing stiff challenges.
Ray Collins of MoneyShow.com sat down with Hilary Kramer recently to discuss a world of potential value plays.
What are some undervalued stocks? Hilary Kramer deals with breakout stocks under $10. So what does your...not your crystal ball, this is a lot of science, but give us four or five ideas in diverse sectors.
The most important areas are those that are not yet overextended, very richly trading stocks. So you want to find the companies that have valuations that are compelling and have high dividend yields too, so you have income and you have some upside.
Two companies I absolutely love. One is Brazilian: Vale (VALE). It's a Brazilian company with close to a 5% dividend yield; copper, aluminum, fertilizer, diversified commodities, which is the way you want to be in a market that could be healing and returning to profitability globally.
Another one is BHP Billiton (BHP), and that is very similar to Vale: an Australia-based commodities producer that, again, is diversified and is in every area of mining, from gold and silver all the way to iron ore.
Also, I love some of the biotech stocks that to me still represent opportunities because of the upside. There is one stock in particular, Regeneron (REGN), that many people feel has run at this point.
But from a valuation standpoint, this producer of macular degeneration therapeutics is a very compelling company, because it also has drugs and medications for cholesterol reduction that are really on the blockbuster level, as well as for anesthesia, oncology, and nervous system drugs.
So is this current market right now perhaps overextended, do you think?
Very much so. In this particular situation that we're in now, you have a lot of money that has had to go into the equity markets, which I've been very bullish on, so there's been a lot of money made. But you're talking about companies that really may have cannibalized themselves, or are saturated in too many markets.
Although I personally love Starbucks (SBUX). It's pricey where it is right now, and given the kind of competition that Starbucks is now facing. The same with a company like Whole Foods (WFM). Whole Foods is a great supermarket. We all love it, but there's local competition. There are larger, regional, healthy, organic-based supermarkets that are also developing.
Somebody said that Apple (AAPL) is a forbidden fruit now.
What a great way of putting it. The truth is that although Apple has excellent products, in 10 years from now there's no way that earnings are going to be where they are today...and unless Apple comes out with really strong innovations, there are other companies that are very compelling.
I just returned from a trip around the world: Europe into Central Asia, into Japan, and then back to the United States. What I saw was the strength and power of Samsung (SSNLF). And the excitement we have toward Apple isn't necessarily shared in all countries, even though most of those countries have been exposed to Apple.
So Apple may not be tomorrow's big stock, but maybe tomorrow's big stock would be a company like Splunk (SPLK), which is a data mining company, which helps companies deal with all of the data that comes into their Web site and turning that into market efficiencies, so that they can turn around and do a better job targeting and merchandising, as well as bringing in and gaining competitive edge against their competitors.
So that's really where one wants to be. Apple might be yesterday's tech stock.
More from The MoneyShow
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Like many companies this winter, the fast-food giant blamed a drop in same-store sales on the weather. But could its problems be bigger than a snowbank?
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.