There are a lot of names that are down 30% over the past 6 months. However, those stupid bastards are still trading 17x sales. How in the world do you expect me to buy that?
Using the robust screener inside of The PPT, I’ve been scouring for stocks that I can purchase–after the coming decline. A few names that aren’t on the list, but will always be purchased by me on dips are:
YELP
SLCA
JAZZ
All in different sectors, those three names represent the main drivers of this market, the things I am bullish on–long term.
Social Media
Oil & Gas
Biotech
The problem with my favorite stocks, all of which I still own, is that they’re near new highs.
But here are some stocks that have been crushed and represent true value. Keep in mind, more often than not, stocks trade lower because fundies suck. So what appears to be value may in fact be a trap. Alas, the perils of speculation.
POST (WTF!, people hate cereal)
SINA
YOKU
SOHU (who knows if these burritos are worth anything?)
FUEL
CREE
SALE
CBI
WFM
SFM
If you have any ‘cheap’ stocks, post them in the comments.
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Dr. Fly, I like the $TCK here.
$QIHU
Like it
$PRIM when the market dumps. $40 target
DDD
GME
RSX
Me olde favorite TCEHY.
BP! … oil and gas, there getting dumped because of headlines
nugt. the rest of that list is garbage
NGUT is a turd and so are you, and your entire family.
Thank you.
up 4%premarket. owned
Once again, it’s how you finish
SDOW
DE, GNW, AES, ESV, IGT, WFM
DO
I really like your ideas. I was going to say ESV. The drillers are getting cheap and it is one of the better ones I think.
The other idea I had that might be up your alley: AGCO is an agriculture equipment company like DE that is starting to look cheap like, but more conservatively financed. Hope that helps.
This is my first post but I have been lurking longer than I am will to admit to; I tend to keep my ideas to myself and leech off the intelligence that is sometimes displayed on this website. At least I am finally giving something back and share my thoughts so you can read what I think is the bear case on ag stocks.
I would caution against owning agriculture stocks. I am a farm operations manager in northwest Minnesota so I have firsthand knowledge in regards to what farmers are facing across the nation. At least you get to see from the viewpoint from a person that works on the farm, not Wall Street so it should provide some insight because analysts are generally late to the game. They are reactive not proactive, their jobs depend on following the herd for the most part. I talk to other farmers, equipment dealers, seed dealers, and the managers in charge of a huge grain elevator outside of town. Wheat, soybeans, and corn are all down huge so far this year with no end in sight. We are/were in a bubble which has just started to pop (ZIRP is affecting farming hugely.) Farming runs in long cycles, the last bubble was in the late 70’s and was crushed in the early 80’s by higher interest rates led by Volker.
I believe the ag sector stocks will be value traps for years to come so take that forward P/E that analysts have with a grain of salt. I could see earnings reductions of over 30% and a 60% decline wouldn’t even surprise me. There is a glut of new or very new equipment on farms and dealerships so farmers will not need to upgrade for years to come and dealerships will be taking it up the ass. Also farmers will not be upgrading anything because of the price of commodities. Many farmers will be losing money this year and the other farmers that do manage a profit their incomes will be down significantly. Does this sound bullish for farm equipment sales?
Farmers’ profits lead to new equipment sales and it’s about as simple as that. If farmers don’t have money they don’t buy equipment. We were in a bubble so farmers had record incomes across the board. Farmers reduce their taxes by buying new equipment that they really don’t need just to avoid taxes. Also a tax credit expired which allowed you to deduct up to $500,000 for new equipment. To give you an idea farmers are trading off pickups every year just to avoid paying taxes. It reminds of Greece where their citizens don’t pay shit for taxes (Ok, not quite that bad but you get the point.) I don’t even recognize half the vehicles in my small town anymore because they are all brand new. Farmers’ combines, tractors, machinery (sprayers, grain carts, chisel plows, super coulters, cultivators, 4 wheelers, bobcats, augers, and I could still go on. All their farm equipment is new and farmers could go 10 years without upgrading equipment. Farmers in general are notoriously bad for trying to avoid paying income taxes and it is ingrained in them like it has molded with its own DNA hence no profits no farm equipment sales.
I don’t have much time right now because we are in the middle of grain harvest to research these stocks so I am just going with my gut on this. I see a bubble that is popping before my very own eyes. In the next few trading days I will be entering short positions in DE, CNHI, TITN, and possibly BKE. I know BKE is The Buckle (retail) but their stores are concentrated in the Midwest and farmers’ incomes will be going down drastically. My thesis is that BKE benefited from the farming boom, but they will also suffer when farming goes back into the shitter. But the pure plays would be DE (75% of sales ag related) CNHI, and TITN where they are pretty much all ag. The beta is higher on TITN and their balance sheet is much worse than DE. I will also be looking to short some publicly traded companies that own farmland too. I will keep all my shorts in the agriculture sector to 10% of my portfolio. I view them as a hedge too, which I don’t mind with the markets at these levels and it allows me to increase my long exposure if I so chose to do so. Either way I think DE, CNHI, and TITN will underperform the market.
Thanks for sharing your experience and point of view! I appreciate the commentary and insight. Thanks again!
Short de
How about tsco?
I do not know enough about tsco to form a consensus but I would figure they would be hurt too. I have only been in their stores once so I just don’t know enough about them to short them. Another possible short that I have thought about is TRMB, they design GPS units. John Deere has their navigation and TRMB is installed on Case (CNHI) machinery which TITN sells. However, TRMB has a service model and I would say no matter what farmers will not go without using GPS. Once you have GPS you don’t go back, because this allows the tractor to autosteer. Autosteer allows the tractor to drive by itself in a perfectly straight line. It makes running the tractors much easier and does a better job. It saves the farmers’ money too because you reduce overlap when seeding, spraying, combining, and all of the field work (chisel plowing, cultivating, ditching, etc.) Another possible short is MON but from what I hear and by what the company is saying is they will be raising seed prices next year but by a smaller percentage than normal. I do not see people switching away from Round Up ready seed anytime soon either.
Now onto what is confirmation of my short thesis in regards to DE. The John Deere salesman talked to us (we use all John Deere equipment) and to give you an idea they sold 15 new combines this year. Take a guess at how many they ordered for next year? ZERO. I did not think it would be this bad, I figured new sales would be down over 50% but it is even more than that. For some perspective we are harvesting what looks to be an average wheat crop and the soybeans are looking to be above average in yield so this is not due to a bad crop or some disaster. This is commodity related because all soft commodities have fallen. Also, land owners are raising land rents to unsustainable levels which also squeeze farmers and this is happening across the nation. Banks have also already told some of the younger farmers that they will not be getting loans next year because they don’t have enough equity built up and farming doesn’t cash flow right now. Either way it is not a pretty picture and solidifies my thesis that agriculture will be going through some tough times.
PDS — likely my next purchase. Good way to play LNG and continued energy drilling in NA on a “cheap” name
KWK gets cheaper by the day.
XNET.
Stock is $12 and they’re carrying $7 in cash. Even factoring in the Chinese fraud discount, it’s a steal.
Chinese cash is really made from plastic.
270 stocks were down 3%+ today.
Buyer BEWARE. You’ve been warned…yet again.
OLED
WFM will take off.
$UVV
UEPS
OUTR
^^^ That looks interesting
FBR can’t make pampers or depends without it
$kndi on a pullback, extra burrito and chinamen love Americans that love electric cars
Can you count $AG? I know you dabbled earlier. I added to a small 2016 leap position today ($10 strike), with potential to add more if this bottom holds.
Also, is there anywhere on the site where I can review a summary of the various premium offerings and what’s included in each? I think I am ready to make the plunge but I am not sure what service is best for my schedule and objectives. Or is there a special piker-one-month-try-em-all-to-see-what-works-best-for-you bundle rate?
Thomas Jefferson
At the moment, we do not have a bundle rate. You can view each product page for discretion and summary, located via ads on bloggers pages and top toolbar.
Or email [email protected]
Take a look at MIDD…and btw, you gotta love their address
Knew about midd since 40– pizza ovens
Upon further reflection, I am long EBR. It is said to be one of the least expensive stocks in the world. And with the political landscape potentially improving in Brazil, it could be a multi-bagger over the next year or two.
I am up 16.5% since opening the position 8/18 even with the pullback the last two days. It’s a buy right here. I’ll be doubling when it gets headed back north.
SLCA??!?!??!? You favor fracking?
Not only do I favor fracking, I think we should sell fracking water in bottles for the homeless.
Solution to the homelessness problem as well? Add some alcohol so they are sure to drink it.
CREG gonna go ham son…cause I bot it today 😉
COH is cheap.
Note that I said “sell” fracking water to homeless and not give it away.
Okay, but we all have to give them a dollar at the freeway entrance.
“Cheap Stawks” ….*SNICKER*
Come on….you know which stocks are cheap? The ones that will soon be bankrupt. The stocks that MIGHT soon be bankrupt are not cheap….
$RVLT is only a little less cheap than $CREE… I have that pig in my IRA.
cree is garbage. 44 p/e for lightbulbs lol.
POST is a pin action play off of increasing marijuana legalization.
I’d rather sell kitty litter to the drillers
COG, CHK, EXK (EXK closed at $5 today, cheap)
MON
TSLA is cheap. One day the future Tesla car’s will run exclusively on Mars rock… And of course Elon’s Space X will be the sole importer of said Mars rock.
Michael Bay will land us on Mars.
PZE
Cheap stocks to buy? I got nothing, it is all too expensive right now. Waiting for a 20% correction. A number pulled from my ass but all my favs are at least 20% too high. Until then, cash and GLD. Mostly the former.
Might as well play a lotto ticket. The odds are better.
CLF. Blood in the streets.
CSH
BX remains cheap.
MPC, SYMC, MON, BGS, XLS, UTX, MRVL, CA
Yesterday US index futures failed to rally, even after Draghi’s QE announcement. I have to admit I was losing faith in The Fly’s crash prediction, but maybe he is right… after all he trades algorithms. Either way vol is coming back into the market, and I will make bank before Xmas. You have my word.
OAS is a bargain, selling cheap but strong fundies.
GOGO
COH and WWE
Any index Outs will do well one month time line
I am correct!
s/be “Puts” not “Outs”.
Fuck!
Big fan of RRC if I’m lucky enough to see it get to 65ish
What’s your 6 mo price target on SLCA/YELP/JAZZ? Love the picks. As a petroleum geologist, I might suggest holding all sand producers in a basket since they geographically dominate different areas. Even just EMES, HCLP and SLCA in a basket would do really well. Limits execution risk….
And speaking of cheap stocks, I’m surprised nobody has mentioned Apple. Or Microsoft. Are they dinosaurs? Yes. But they outperform the market on a relative basis during sell offs. Especially if on 9/9 we find out about AAPL and mobile payments.