4 Great Buy Ideas Trading Under $40, 1 To Avoid
Michael is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Of the many things that may determine a great stock, price is always a very subjective factor in determining the success of a company. There are many stocks on the market selling for under $40 per share that hold their weight in the market and promise gains either in the short or long term. Buying low price stocks can be extremely lucrative if you find companies that are on the verge of explosive moves and take your position at the right time. Which of these stocks is poised to make the greatest move in 2012? Read on to find out and please use my research as a starting point for own
Vodafone Group (NASDAQ: VOD) is extremely undervalued and in a position to make up a lot of ground this year, making it a nice buy. The telecom has major operations in over 22 countries and has shown profits in excess of $12 billion for the past two years. Vodafone just bought back almost 12 million of its shares on the London Exchange, suggesting that the company is in position to make a steep climb after an unpredictable year in 2011. Now is the perfect time to take a position in this company before it takes off.
The Silver Wheaton Corporation (NYSE: SLW) is able to hold its own in a market where its commodity sees highly volatile fluctuations in price. It has seen three consecutive stagnant years with a total of $600 million in profit over those years. The Silver Wheaton Corporation deals solely in silver which gives it a major downside in light of just how easily silver prices can drop and because it has all its eggs in one basket it is a 50/50 gamble that I'm not willing to chance it on. I suggest looking elsewhere if you are looking for a sure thing.
Sirius XM (NASDAQ: SIRI) is undoubtedly going to make a move this year because it simply has nowhere to go but up. Over the past three years, the company has been able to reverse a trend of very heavy losses ($5.3 billion in 2008 and $538 million in 2009) to pull out a profit in 2010 and 2011. Sirius has contracts with all of the top rated automakers in the world to install its hardware as a factory option and its release of Sirius XM 2.0 has poised the company to gain big in 2012. This stock is a must buy with the potential for major growth over the next one to two years.
CVS Caremark Corp (NYSE: CVS) looks like a solid buy as a long term growth stock due to consistency and steady growth. Profits over the last few years have remained in the area of $3 billion for the leading pharmacy chain in the United States and its stock has climbed from $27 to just above $40 in the past three years. I expect 2012 to be no different and believe it to be a good buy based on consistency and its position in an industry that shows constant demand.
Medtronic (NYSE: MDT) is another symbol of consistency with a total of $8 billion in profits over three years and back to back years of profits exceeding $3 billion. According to its president, the company may be able to save the province of Manitoba $500 million through its medical technologies and innovations. Should the company strike a government deal, we could see its stock take a meteoric rise over the coming years and especially in 2012. Medtronic is a definite buy due to great management, consistent profits and a strategic position in the medical technologies market that is bound to pay off.
My most favorable and low risk pick of this group is Vodafone, which shows consistent growth, profitability and a wide reach into over 22 different markets. Sirius has been showing that it can turn itself around and I believe that it has a lot to prove to the many nay-sayers who feel the company has fallen into obscurity. The launch of Sirius XM 2.0 is just what it needs to find its bearings and at under $3 per share, on a discounted cash flow basis it is a cheap investment that could come with serious returns. CVS and Medtronic are both buys but I feel that their gains will be more gradual and less explosive, requiring a long term commitment in order to see results.
The Motley Fool owns shares of Medtronic. IUMFool has no positions in the stocks mentioned above. 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.