Will These Under $20 Stocks Trade For $30 In 2012?
Robert is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Every investor has heard and recited the mantra, “buy low, sell high,” and this four word phrase sums up the goal of most investors who find it much easier to profit off of a company’s success than on its failure. On the other side of the coin is the common misperception that there is always something inherently wrong with a cheap stock because if the company was truly worthy of investment its price would reflect its worth. Unfortunately, the market is not so cut and dry and we cannot look at the matter in black and white. Regardless of the reason each of the following companies trade for around $20 or less per share, which of these stocks is poised to make a run into the $30s?
Whether you love or hate Ford (NYSE: F), you need to give this company its due for the past several years as the only American automaker to reject bailout money and still remain a contender against competition such as General Motors (GM) and Toyota (TM). I believe that Ford is one of the most undervalued stocks on the entire market and that others will begin to agree with me in large numbers. Ford Motors posted profits of $6.5 billion in 2010 and another $6.4 billion in the first three quarters of 2011, which is a completely different outlook than the automaker’s $14.6 billion loss back in 2008.
Ford is currently chasing General Motors for the top sales position in the United States and continues to make up ground each and every year. Its new 2012 Fusion hybrid has gotten so much attention that the company has reopened facilities in Michigan to keep up with demand and given Americans some jobs in the process. The stock broke its simple moving average of $11 at the end of 2011 and has been on a climb since, and I believe that we can ride Ford all the way up to $30 over the next year or two.
Applied Materials (NASDAQ: AMAT) is a giant in the semiconductor industry that is looking like it is about to go for a nice run. Everything is looking up for this company from sales and profits to its stock price, which has recently made a move past its moving average as well. Applied Materials made a profit of $1.9 billion in 2011, which is more than double its 2010 earnings and I expect the trend to continue into 2012. Now is the best time to get in before this stock makes its move.
Cisco Systems (NASDAQ: CSCO) is another extremely undervalued company that I believe will double its value in the next two years. It pulled in $6.3 billion in revenues in 2011 compared to the $7 billion that its leading competitor, Hewlett-Packard (HPQ) earned, but Cisco was able to do it much more efficiently with $16 billion in expenses compared to Hewlett-Packard’s $97 billion and 71,000 employees compared to Hewlett-Packard’s 350,000. Not only is Cisco the pinnacle of efficiency, but it has two major projects in the pipeline that are bound to set things off.
In Cisco’s latest press releases, it is set to launch TelePresence in Sweden, which connects doctors and pharmacists through video conferencing and Cius, which when installed in gas stations across Brazil, will allow customers to gain information and access services all through one point. Both new systems are bound to open up new possibilities for Cisco and its stock is going to respond well to the company’s innovations now and in the next few years.
News Corporation (NASDAQ: NWS) is the owner of the highly controversial Fox News, but its news will not be the driver of its success this year. The company just acquired a new sports channel in Brazil and will be relying on its continued success in the sports market to add to its $2.7 billion profit in 2011. The election year should increase its news viewership as it covers the campaigns, but due to streaming over the internet, many people get their news online and Fox Sports will get the lion share of the company’s attention. This stock has already been on the move for some time now and I think that now is the time to take a position if you are going to or it will be too late come next year.
Pfizer (NYSE: PFE) is an extremely safe stock this year and has been looking bullish for months now with a trend that I believe will continue due to the consistency the company has shown in general. Pfizer has averaged around $8.2 billion in profits each year for four years running now and I believe that the major pharmaceutical has the momentum needed to maintain a fast paced rise to $30 per share and beyond. Its stock is currently sitting around $20 and I don’t believe it will stay there for long.
General Electric (NYSE: GE) is looking to make its mark in the energy and power infrastructure markets and 2012 is going to be a pivotal year for the manufacturer of home appliances and technology infrastructure. General Electric’s move into the power infrastructure market has been a steady one and the company has proven in the past that it can be a leader in any market that it competes in. Its steady profits of over $10 billion per year for the last three years speak volumes of the company’s profitability and consistency and I believe this is a good buy for 2012.
I really believe that Ford and Cisco have the most to prove this year and that they will take huge strides in 2012, making them my top picks in this group. Pfizer and General Electric are safe companies that show consistent profits and patterns each year, making them the best low risk choices for now and the long term.
Motley Fool newsletter services recommend Ford and Pfizer. The Motley Fool owns shares of Ford. Vatalyst 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.
