XPO Logistics Inc (XPO), Restoration Hardware Holdings Inc (RH): Top Value Stocks for the Next Six Months

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XPO Logistics Inc (NYSE:XPO)

What are the best opportunities for the second half of 2013 — and why is there so much upside? Rather than my “Value of the Month” article, I am focusing on five stocks that are all presenting deep value and large upside for the second half of 2013.

Value of the decade!

Last year, I called XPO Logistics Inc (NYSE:XPO) my value of the decade because of its unappreciated stock price mixed with its large growth potential. It is a rapidly growing company: Last quarter, its revenue increased 155% year-over-year.

In the last 12 months, the company has generated revenue of $348 million, almost 100% greater than 2011. For 2014, revenue is expected to be a billion, and then $5 billion within the next few years.

The company’s growth is due to an aggressive acquisition and cold start strategy, and up until now, the company has been relatively unknown. However, in the last month, it has seen its valuation increase 10%, and with such a rapid growth plan, I see few scenarios where the company maintains its $330 million market capitalization.

Overall, XPO Logistics Inc (NYSE:XPO) has one of the best unmeasured fundamental strengths in its favor, and that is its management. Its CEO, Bradley Jacobs, has started and built four billion dollar companies in his career, and has hired an all-star team of executives from the likes of Goldman Sachs Group, Inc. (GS) and C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW). With that said, I like the company’s chances to trade higher in the second half of the year, especially being less than $1 from new highs.

A good start, but an even better finish!

Restoration Hardware Holdings Inc (NYSE:RH) has rallied 120% in 2013, but I still believe there is significant room to run even higher.

This is a company that is growing by 35% year-over-year, and is doing so without expansion, but rather same store sales growth. At just 2.3 times sales, I think the stock is cheap, and considering it has just $1.3 billion in sales over the last 12 months, I think there is still a considerable amount of room to grow.

At its current value, Restoration Hardware Holdings Inc (NYSE:RH) is cheaper and is growing significantly faster than Lumber Liquidators. With that said, I think continued growth, and the expectations of upcoming store expansion will lift this stock even higher into the second half of 2013.

Changing sentiment to reflect growing fundamentals

You might think that all upside is priced in for Ford Motor Company (NYSE:F), due to its new 52-week highs and its 76% gain over the last year. But what about the fact that it is trading flat since January 2011, despite significant year-over-year fundamental gains? To me, this indicates that more upside is to come!

In the past, investors were constantly worried of another recession. For the last four years, the recovery has been slower than anticipated and during the recession, the auto industry was deeply affected by the weakness.

In my opinion, the market has remained highly skeptical despite strong performance from the auto space. However, with double-digit revenue and unit sales growth year-over-year to compliment a 2.5% dividend and a stock trading at just 0.50 times sales, I don’t see how the market can disregard Ford Motor Company (NYSE:F)’s performance. Thus, I think this value stock would trade even higher in the final six months of 2013.

The other post-recession laggard, and its upside

Much like the auto industry, banks have been highly susceptible to fears of a new recession. Thus, the industry is yet to fully recover from the debt downgrades of August 2011, as investors have been slow to buy.

Certain financial companies such as Citigroup Inc. (NYSE:C) and Bank of America Corp (NYSE:BAC) remain massively undervalued, while others such as JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo & Co (NYSE:WFC) have climbed back above pre-recession highs. With that said, I really like Bank of America and the fact that it is trading at just 65% of its book value per share.

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