Post-bankruptcy stocks are often undervalued because mainstream investors perceive them (often wrongly) as being of poor quality and very risky, suggests George Putnam, editor of The Turnaround Letter.
Investors remember the bad things that happened to the company to force it into bankruptcy. What they don't understand is that many companies take advantage of Chapter 11 to reshape their businesses and balance sheets so that they emerge as very strong competitors.
As a result, post-bankruptcy stocks can provide good returns to savvy investors who are not swayed by their past history, but focus on the future prospects.
The companies discussed below all emerged from Chapter 11 over the last several years and look to us as though they are still undervalued.
General Motors (GM), one of the world's largest automakers, went through a government assisted bankruptcy in 2009. The company used its sojourn in Chapter 11 to modify labor contracts, rationalize operations and restructure its balance sheet.
Hot Freight Stocks To Watch Right Now: Dollar Tree Inc.(DLTR)
Dollar Tree, Inc. operates discount variety stores in the United States and Canada. Its stores offer merchandise primarily at the fixed price of $1.00. The company operates its stores under the names of Dollar Tree, Deal$, Dollar Tree Deal$, Dollar Giant, and Dollar Bills. Its stores offer consumable merchandise, including candy and food, and health and beauty care, as well as household consumables, such as paper, plastics, household chemicals, in select stores, and frozen and refrigerated food; variety merchandise, which includes toys, durable housewares, gifts, party goods, greeting cards, softlines, and other items; and seasonal goods, such as Easter, Halloween, and Christmas merchandise. As of April 30, 2011, it operated 4,089 stores in 48 states and the District of Columbia, as well as 88 stores in Canada. The company was founded in 1986 and is based in Chesapeake, Virginia.
Advisors' Opinion:- [By Lawrence Meyers]
The finance sector, as mentioned, can make money in many ways. The second-highest growth sector is expected to be consumer discretionary, with a 6.2% increase. When you look at earnings from luxury brands like Tiffany & Co. (TIF), and that the hotel sector continues to do very well, it suggests that those people who are in good financial shape are spending their money. Meanwhile, dollar players like Dollar Tree (DLTR) continue to perform very well, suggesting that folks with less money are spending it on cheaper items.
Best Undervalued Stocks To Buy Right Now: Tupperware Corporation(TUP)
Tupperware Brands Corporation operates as a direct seller of various products across a range of brands and categories through an independent sales force. The company engages in the manufacture and sale of kitchen and home products, and beauty and personal care products. It offers preparation, storage, and serving solutions for the kitchen and home, as well as kitchen cookware and tools, children?s educational toys, microwave products, and gifts under the Tupperware brand name primarily in Europe, Africa, the Middle East, the Asia Pacific, and North America. The company provides beauty and personal care products, which include skin care products, cosmetics, bath and body care, toiletries, fragrances, nutritional products, apparel, and related products principally in Mexico, South Africa, the Philippines, Australia, and Uruguay. It offers beauty and personal care products under the Armand Dupree, Avroy Shlain, BeautiControl, Fuller, NaturCare, Nutrimetics, Nuvo, and Swissgar de brand names. The company sells its Tupperware products directly to distributors, directors, managers, and dealers; and beauty products primarily through consultants and directors. As of December 26, 2009, the Tupperware distribution system had approximately 1,800 distributors, 61,300 managers, and 1.3 million dealers; and the sales force representing the Beauty businesses approximately 1.1 million. The company was formerly known as Tupperware Corporation and changed its name to Tupperware Brands Corporation in December 2005. The company was founded in 1996 and is headquartered in Orlando, Florida.
Advisors' Opinion:- [By Oliver Pursche]
European large-cap pharmaceuticals like Novartis (NVS) �and Bristol Meyers Squibb (BMY) �count amongst some of our favorite stocks right now, as do U.S. multinationals that are growing revenue and margins in Asia ��Tupperware (TUP) �is a shining example. Stay away from utilities and energy stocks, as they are likely to be the laggards over the next year.
- [By Eric Volkman]
Tupperware Brands (NYSE: TUP ) is reaching into its corporate bowl for a fresh payout to shareholders. The company has declared a quarterly dividend of $0.62 per share. This will be paid on July 8 to stockholders of record as of June 19. That amount matches the firm's previous distribution, which was paid in early April. Prior to that, Tupperware Brands was rather less generous, handing out $0.36 per share.
- [By Arie Goren]
After running this screen on May 21, 2013, before the markets' open, I discovered the following eight stocks: Sunoco Logistics Partners LP (SXL), Leggett & Platt Inc (LEG), Copa Holdings SA (CPA), RPC Inc. (RES), Tupperware Brands Corp. (TUP), Herbalife Ltd. (HLF), John Wiley & Sons Inc. (JW.A) and C.H. Robinson Worldwide Inc. (CHRW).
- [By Teresa Rivas]
We think KMB will be perceived as the safest of the multinationals. Its sales outside the US are about 55% of total; this compares to 65%-70% for Procter & Gamble (PG) and Coty (COTY) and 80%-90% for Colgate (CL), Avon and Tupperware (TUP). In general, its risk to the most volatile currencies is below average (its exposure to Eastern Europe is less than 2% of sales), though it is still translating results in Venezuela (about 3% of sales and profit) at the official rate of 6.3 VEF/$ (the parallel rate just hit 175 VEF/$) and Argentina (also 3% of sales) may devalue again. The cost of important raw materials has started to weaken; as they follow oil�� decline they could boost gross margins in 2H15. Of note, polypropylene and natural gas are off 17% 4Q-to-date; pulp prices, while not declining much, seem manageable.
Best Undervalued Stocks To Buy Right Now: Caterpillar Inc.(CAT)
Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. It operates through three lines of businesses: Machinery, Engines, and Financial Products. The Machinery business offers construction, mining, and forestry machinery, including track and wheel tractors, track and wheel loaders, pipelayers, motor graders, wheel tractor-scrapers, track and wheel excavators, backhoe loaders, log skidders, log loaders, off-highway trucks, articulated trucks, paving products, skid steer loaders, underground mining equipment, tunnel boring equipment, and related parts. It also manufactures diesel-electric locomotives; and manufactures and services rail-related products and logistics services for other companies. The Engines business provides diesel, heavy fuel, and natural gas reciprocating engines for Caterpillar machinery, electric power generation systems, marine, petrol eum, construction, industrial, agricultural, and other applications. It offers industrial turbines and turbine-related services for oil and gas, and power generation applications. This business also remanufactures Caterpillar engines, machines, and engine components; and offers remanufacturing services for other companies. The Financial Products business provides retail and wholesale financing alternatives for Caterpillar machinery and engines, solar gas turbines, and other equipment and marine vessels, as well as offers loans and various forms of insurance to customers and dealers. It also offers financing for vehicles, power generation facilities, and marine vessels. The company markets its products directly, as well as through its distribution centers, dealers, and distributors. It was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. Caterpillar Inc. was founded in 1925 and is headquartered in Peoria, Illinois.
Advisors' Opinion:- [By Mike Deane]
Before the opening bell on Monday, Caterpillar Inc. (CAT) announced its fourth quarter and full year earnings, posting lower revenue compared to last year’s quarterly and FY results.
CAT’s Earnings in Brief
Caterpillar reported fourth quarter revenues of $14.402 billion, down 10% from last year’s Q4 revenue of $16.075 billion. The company’s Q4 profit came in at $1 billion, up from last year’s Q4 profit of $697 million. SWK’s EPS for the quarter was $1.54, up from last year’s Q4 EPS of $1.04. CAT beat analysts’ estimates of $1.28 EPS on revenues of $13.64 billion. For the full year, CAT posted revenues of $55.565 billion, down from $65.875 billion, and profit of $3.789 billion versus last year’s $5.681 billion. For the FY2014, CAT expects EPS of $5.85.CEO Commentary
Caterpillar’s chairman and CEO Doug Oberhelman had the following comments about the company’s earnings:�”In such a challenging environment, I am proud of the way our employees came together in 2013. Despite a sales and revenues decline of about $10 billion, we set a record for operating cash flow, strengthened our balance sheet and improved our overall market position for machines. We continued to improve safety in our facilities and the quality of the products we ship each day. Cost flexibility is critical to our strategy and was a significant focus in 2013 as we took substantial actions to help maintain profitability as sales declined. Excluding the impact of cost absorption our�manufacturing costs�and SG&A and R&D expenses were favorable by $1.2 billion compared with 2012. It wasn’t easy, especially for our employees who endured an incredibly tough year, but the actions we initiated helped us deliver strong operational performance in 2013.”
CAT’s Dividend and Stock Buyback
Caterpillar did not announced any changes to its dividend in its earnings report. The compa
- [By Taylor Muckerman and Joel South]
On the heels of a better-than-expected release from Peabody Energy (NYSE: BTU ) and expectations from Caterpillar (NYSE: CAT ) that coal prices could rise somewhat in 2013, both businesses might be set to succeed in tandem. The price of natural gas has been climbing rapidly to start 2013, which should help coal regain some traction. And its East Coast export facility continues to provide access to the demanding European market. In the following video, Taylor Muckerman expects some positive news on Thursday and thinks you should, too.
- [By Eric Volkman]
Caterpillar (NYSE: CAT ) is keeping its quarterly dividend policy steady. For its first payout of 2013, the company will hand out $0.52 per share of its common stock on May 20 to shareholders of record as of April 22. That matches the distribution of the preceding three quarters. Before that, the company disbursed $0.46 per share.
Best Undervalued Stocks To Buy Right Now: Schlumberger N.V.(SLB)
Schlumberger Limited, together with its subsidiaries, supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide. The company?s Oilfield Services segment provides exploration and production services; wireline technology that offers open-hole and cased-hole services; supplies engineering support, directional-drilling, measurement-while-drilling, and logging-while-drilling services; and testing services. This segment also offers well services; supplies well completion services and equipment; artificial lift; data and consulting services; geo services; and information solutions, such as consulting, software, information management system, and IT infrastructure services that support oil and gas industry. Its WesternGeco segment provides reservoir imaging, monitoring, and development services; and operates data processing centers and multiclient seismic library. This segment also offers variou s services include 3D and time-lapse (4D) seismic surveys to multi-component surveys for delineating prospects and reservoir management. The company?s M-I SWACO segment supplies drilling fluid systems to improve drilling performance; fluid systems and specialty tools to optimize wellbore productivity; production technology solutions to maximize production rates; and environmental solutions that manages waste volumes generated in drilling and production operations. Its Smith Oilfield segment designs, manufactures, and markets drill bits and borehole enlargement tools; and supplies drilling tools and services, tubular, completion services, and other related downhole solutions. The company?s Distribution segment markets pipes, valves, and fittings, as well as mill, safety, and other maintenance products. This segment also provides warehouse management, vendor integration, and inventory management services. Schlumberger Limited was founded in 1927 and is based in Houston, Texas.
Advisors' Opinion:- [By Jim Jubak]
But it just doesn't seem to matter for Schlumberger (SLB). Schlumberger is a member of my Jubak's Picks portfolio.
On January 17, the oil services and technology company reported fourth quarter earnings of $1.35 a share, beating Wall Street estimates by two cents a share. Earnings grew by 29.8% year over year.
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