Have you ever been dumpster diving? I have–it is a great past time. One thing I’ve learned is that you never know what some people will throw away. Sometimes there is a reason it is being thrown out, while other times you find something that proves the old adage: one man’s trash is another man’s treasure.
This applies to the stock market as well. Many an investor has found a treasure in an investment that other investors were throwing out. So, let’s look for some of these treasures in this article. But first, we’ll need to take a trip to the dump.
These stocks have been thrown out by investors judging by their 52-week price change.
Herbalife Ltd. (NYSE:HLF) -50%
Gold Fields Limited (ADR) (NYSE:GFI) -41%
Hmmm, what do we got here?
|Company||Market Cap||*EPS Growth||P/E Ratio||Forward P/E||PEG|
|Gold Fields Ltd||$4.68 Billion||70%||7.3||5.73||n/a|
|Questcor Pharmaceuticals||$1.6 Billion||101%||8.84||5.38||0.24|
|Jabil Circuit||$3.45 Billion||73%||9.42||6.45||0.66|
*Last three years
As you can see, these stocks have had double digit growth, have P/E ratios under 10, and price to earnings growth ratios under 1. To add even more perspective to this, how do the numbers stack up against their respective industries?
|Company||P/E Ratio||Industry Average|
|Gold Fields Ltd||7.3||35.3|
All five of these companies beat the industry averages as far as the price to earnings ratio is concerned. Considering these metrics, all five of these companies look cheap. But are they truly treasures?
Which Are Truly Dumpster Treasures?
Herbalife Ltd. (NYSE:HLF) has had a very rough year, as its down 50%. If you think it is due to their many competitors, think again. Herbalife Ltd. (NYSE:HLF) has done just fine in staying competitive. What happened was David Einhorn asked 3 questions. People thought that this was Einhorn’s short flavor of the month, and quickly sold. This led to the first big drop. Since then downgrades, accusations of being a pyramid scheme, and issues with their auditors have all played a role in hammering the stock down.
In the end Einhorn did short Herbalife, but that is now behind us. Now that Einhorn is done, Carl Icahn is in. Looking ahead to the next quarter, the company is expecting growth between 12%-14%. It offers a dividend of 3.5%. Given the continued growth, and the current low valuations, there seems to be little room left to fall from here.
When it comes to Gold Fields Limited (ADR) (NYSE:GFI), you are probably worried about the recent gold sell-off. There are some concerns when you look at this company. Revenue for was up for 2012, but higher operating costs, and a costly strike at one of their mines, ate into profits. It wasn’t the best of years for the company, and with the shaky gold market it’s not a sure winner.