Take Advantage of Stocks That Lost Because of “Guilt by Association”
Archives: Investing
So far, 2009 is starting off much like 2008 ended: not good for the market. But I remain bullish about the year as a whole.
If you are a long-term investor, you have an incredible opportunity to pick up some stocks that are trading well below where they were at the beginning of 2008. Granted, some – if not most – stocks deserve to be down where they are. They were way over-priced this time last year, and now they are priced accurately.
However, some stocks have gone down for no other reason than “guilt by association.” These are the ones you want to be to adding to your long-term portfolio.
I am talking about companies like Tupperware (TUP) and IBM that are trading at a 30-40 percent discount from where they were one year ago. This despite the fact that their earnings have not declined nearly as much as their stock prices have.
Look for companies with a strong return on equity ratios. Look for companies whose stock price has dropped sharply, but whose sales and revenues have not declined or have not declined as sharply as the stock.
[Ed. Note: The S&P 500 is down 36% from January of last year... the Nasdaq has dropped 763 points in the same time... and the Dow is still hovering around 8,000 points. But you should be ready to take action when the moment strikes. Some incredible opportunities are headed your way, and market analyst Rick Pendergraft has put together an educational program that lays out the simple steps you need to take advantage of them. Not only do you get three months of Rick's best recommendations, you also learn how to make good investment choices yourself. Get the details here.]
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