OLI Investors Guide - Look at These: Stocks to Consider

Investor's Guide: Look At These

Stocks To Consider

February 12, 2008 - With certain sectors of the market collapsed, many smart investors are starting to do more than homework. They're buying stocks in small amounts, building positions for a time when the economy is once again in a growth mode. Make no mistake: the economy will recover. It has ever since 1776. What is unknown is when. If you want to see what some of the "smart" money is buying, check out these stocks.

The one common element they all share: compelling valuations, either in an absolute sense, meaning their prices are the lowest in years or a relative one, meaning they're selling for valuations that are the cheapest they've been in years. Some have P/E ratios not seen in a decade. Others are selling well below book value.

You'll also find some of these have specific problems such as lawsuits or subprime holdings or some other reason for why their prices are so low (relatively or absolutely). You need to sift through those and determine how comfortable you are with that risk. Some of these have no specific reason at all for lower prices. They're just down because investors are selling everything, no matter what the prospects for the company.

These are all very large stocks with plenty of capital. While no company is safe from a major disaster, these stocks should be able to withstand any exogenous blow and recover, then once again lead. Some of these have already rebounded well off their lows, as much as 50%. But they've fallen so far that they still have a great deal of room to reach "fair value".

The overriding sentiment for investors is that a recession is either going on right now, or there is about to be one. That is already priced into these stocks. If the news gets worse, these will go down more. But most likely not too much more. They've already been hit hard. A portfolio filled with these names should perform admirably over the next few years.

Don't rush out and buy these names just because they're on a list. You need to know each story, be comfortable with the company's prospects, then buy a small amount of several of them. Simply buying one will not be the best approach. Diversification is the key to success.

There are many stocks representing good value. This list is by no means complete. But these stocks will give you specific companies to consider and spark your thinking into related areas.

Pharmaceuticals