Three Opportunistic Stocks for 2013 (Part I)
Anh is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
We are coming to the close of 2012 with all of its ups and downs, bears and bulls, sorrow and happiness in both daily life and investing. Many might wonder what 2013 will bring, and what to focus on catching 2013’s opportunities, especially when it comes to investment. Thus, I come up with the idea of writing article series to select stocks for 2013 in three investment themes: opportunistic, value and growth plays. This article will be the first one in the series, it is the part I with 3 stocks for opportunistic plays for the next year. Why opportunistic? Because those stocks have been beaten down significantly in 2012, but they either have a fantastic operating record, or are still market leaders in their respective fields.
1. Hewlett-Packard (NYSE: HPQ)
It made the top of the list for opportunistic plays for many reasons. It was hit significantly both internally and externally. Externally, the overall PC industry slowdown has hit the company quite hard. According to IDC, HP was still leading in the third quarter of 2012 shipments with 13,946 units, accounting for 15.9% share of the total global PC market. Lenovo was getting quite close, with only 20 basis points lower in the global market. In addition, HP also experienced the worst plunge, 16.4% year-over-year, whereas the average declines for all vendors were 8.6%. Misfortunes never come alone. Internally, HP had to write off as much as $8.8 billion, accounting for more than 80% of the $11 billion price tag it paid to acquire Autonomy. Out of that, $5 billion was due to accounting improprieties, disclosure failure and misrepresentation of Autonomy. Year-to-date, HP has shed nearly 45% from its market capitalization.
Since Nov. 20, HP’s share price began to rise again, from $11.71 to $14.75 currently. Looking forward, 2013 could be an interesting year for HP. Meg Whitman declared the restructuring of the business. She mentioned that the real recovery could not be seen until 2014, and warned investors to expect a significant fall in earnings in 2013. The volatility in HP's share price in 2013 could present some excitng opportunities to pick up shares on the cheap.
2. Groupon (NASDAQ: GRPN)
Here's another exciting opportunistic play. The stock has experienced a lot of volatility in 2012. Since its IPO in November 2011, it has lost more than 80% of its market value. The stock hit rock bottom at around $2.63 per share in Nov. 13, and suddenly jumped to $4.54 just two weeks later, due to the news that Chase Coleman took 9.9% ownership in the company. Then it was rumored that its CEO would be fired, but then he stayed to lead the company, the stock dropped right away. Following Yipit’s data, Groupon was still the leading player in the discount marketplace, with a 53% market share. The second player, LivingSocial, was far behind, with 22% share. With the market leading position in an increasingly competitive industry, I think Groupon will have an interesting year ahead in 2013 with expected volatility.
3. Facebook (NASDAQ: FB)
The company emerged to be the biggest IPO in history with an initial price that valued this social network at as much as $100 billion in May this year. This pegged the less than 10 year old start-up in a group with the likes of Intel, Cisco, and British American Tobacco in terms of market cap. After the IPO, the market valued Facebook in the downward trend, to $17.73 in the beginning of September. In the same month, it reported to have one seventh of the world population, reaching 1 billion active monthly users. The lock-up expiry date for insiders to sell the shares, has created a lot of volatility for the stock. The biggest batch lock-up had already expired in Nov. 14, with 749 million shares. Currently Facebook is trading at $26.81 per share, the market is valuing the company at as high as 45x forward P/E.
Foolish Bottom Line
Among the three stocks above, Groupon seems to have the most potential to rise ahead due to its plunge in the stock market this year and its market leading position. All of the three stocks could be considered opportunistic; all will be volatile, and I expect these three to have a nice run in the coming year. In the next article, I will uncover two more opportunistic stocks for investors in 2013.
hoangquocanh has no positions in the stocks mentioned above. The Motley Fool owns shares of Facebook and has the following options: long JAN 2014 $20.00 calls on Facebook. Motley Fool newsletter services recommend Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!