Oil and gas exploration and production company Halcon Resources Corp (NYSE:HK) focuses on onshore U.S. shale plays such as North Dakota’s Bakken. It is down over 40% in the last year, with many market players expecting further declines (16% of the float is held short). Profitability is very low, but revenue has recently been surging as production has increased. Consensus forecasts see EPS roughly doubling from 31 cents this year to 64 cents in 2014. If Halcon Resources Corp (NYSE:HK) hits that target then the current market capitalization of just over $2 billion would represent a forward earnings multiple of 9.
Rounding out our list is Cliffs Natural Resources Inc (NYSE:CLF), which has plunged over 60% since the end of June 2012. It’s also a quite popular short target, with the most recent data showing that short sellers are responsible for 32% of the float. Cliffs produces iron ore and metallurgical coal- each an input in steel production, and therefore dependent on the overall economy. At its current market cap, it is valued at 9 times expected earnings for 2014. SAC Capital Advisors, managed by billionaire Steve Cohen, owned 3.5 million shares of Cliffs Natural Resources Inc (NYSE:CLF) as of the end of March; find Cohen’s favorite stocks.
There are many ways to analyze Mr. Market and its hundreds of publicly traded companies, but one way to find deep value plays is by looking at stocks that are down significantly and cheap. Obviously, the aforementioned five companies—Cliffs Natural Resources, Halcon Resources, Apollo Group, Teck Resources Ltd (USA) (NYSE:TCK) and Barrick Gold Corporation (USA) (NYSE:ABX)—can be considered value traps, but there’s an equal chance that they could turn it around. We’ll be watching closely for the rest of 2013.