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:
| Company | How Far From 52-Week High? | Recent Price | CAPS Rating (out of 5) |
|---|---|---|---|
| Vodafone Group plc (ADR) (NASDAQ:VOD) | 12% | $25.95 | ***** |
| Halcon Resources Corp (NYSE:HK) | 41% | $7.21 | *** |
| Alcatel Lucent SA (ADR) (NYSE:ALU) | 42% | $1.54 | *** |
| Dendreon Corporation (NASDAQ:DNDN) | 61% | $6.07 | ** |
| Level 3 Communications, Inc. (NYSE:LVLT) | 26% | $20.81 | ** |
Companies are selected by screening on finviz.com for abrupt 5% or greater price drops last week. Recent price and 52-week-high data provided by finviz.com. CAPS ratings from Motley Fool CAPS.
Five super falls — one superball
Like a belated, publicly traded groundhog, the Dow Jones Industrial Average briefly peeked above the 14,000 mark last week, before diving back down for cover. Nonetheless, the market held pretty steady, ending with the Dow down a small fraction of 1% for the week. But not all investors were so lucky.
In fact, across the length and breadth of the stock market, some 2,890 separate equities ended the week lower than they began it. So what went wrong?
Beginning at the bottom, Level 3 shares got crushed Tuesday after reporting a big pro forma loss (and an even bigger net loss). On the plus side, Level 3 did report strong free cash flow in the fiscal fourth quarter, so there’s still hope this stock can bounce back if it keeps that up.
Dendreon shares were wiped out by a downgrade to “sell” from Maxim Group — a downgrade I happen to agree with.
Alcatel, in contrast, tripped itself up, reporting lower revenues two Fridays back, announcing a big net loss, and firing its CEO to boot. That set investors to betting against it, even though one analyst decided to upgrade the stock.
Meanwhile, oil and gas developer Halcon Resources appears to have declined for no good reason at all, losing 7.6% of its market cap in a week when OPEC released estimates predicting a surge in oil demand in 2013.
Does that sound a little strange to you? It does to me. Yet there’s one stock on today’s list that investors think an even bigger bargain than Halcon — or anyone else on the list, for that matter. Read on, as Fools discuss …
The bull case for Vodafone Group
Five-starred on CAPS, European telecom giant Vodafone boasts a $128.8 billion market cap — and a 5.8% dividend yield. Investors like these numbers for different reasons, with CAPS All-Star jbolley praising the company’s “high div commitment,” while CAPS member Fish08 likes the idea of owning the “world’s second largest wireless carrier, offering regionally diversified high single-digit growth.”
CAV23 predicts: “Synergies. Plus investor confidence in dividend and cheap price will drive market value up to where it rightfully should be.”
Granted, some investors may be frightened away from Vodafone by the fact that currently, under GAAP accounting, the stock looks unprofitable — but that may be a mistake. While it’s true that Vodafone’s income statement currently shows the company with a $2.7 billion trailing loss, Vodafone’s cash-flow statement confirms that, in fact, the company generated $11.5 billion in real cash profits over the past year — and has a long history of generating similarly robust cash profits.
The article 5 Superball Stocks originally appeared on Fool.com and is written by Rich Smith.
Fool contributor Rich Smith owns shares of Apple. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he’s currently ranked No. 339 out of more than 180,000 members.
The Motley Fool recommends Apple and Vodafone and owns shares of Apple and Dendreon.
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