The following includes a growing list of companies whose stock are trading in single digits despite a market cap exceeding $5B as investors no longer need to venture into the minefield of micro-cap stocks for tremendous volatility and trading opportunities. It is not meant to be a complete list, but represents well-known companies across a variety of sectors which offer the potential for high returns once the current market pessimism passes and economic growth returns.
The best approach for investing or trading in these stocks is to select a basket of at least five of the companies to balance the inherent risks of the current bear market with the potential for reward in the form of major upside on sharp market rallies or through long-term recoveries. The stock prices, 10-year returns, market caps, and dividend yields are listed for each company.
S&P 500 SPDR ETF (SPY) -28% (10-year return)
Citigroup (C) $6.40, -70%, $35B, 7.7%
Taiwan Semiconductor (TSM) $6.13, -58%, $31B, 6.1%
Time Warner (TWX) $8.14, -53%, $29B, 3%
EMC Corp (EMC) $9.80, -41.5%, $20B, 0%
News Corp (NWS) $6.55, -51%, $16.5B, 1.8%
Corning (GLW) $8.43, -37%, $13B, 2.4%
Yahoo! (YHOO) $9.14, -56.5%, $12.7B, 0%
Applied Materials (AMAT) $8.42, -12%, $11.3B, 2.5%
Boston Scientific (BSX) $6.55, -45%, $9.8B, 0%
Motorola (MOT) $3.44, -81%, $7.8B, 5.1%
Alcoa (AA) $8.16, -59%, $6.5B, 7.2%
Southwest Airlines (LUV) $8.67, -9%, $6.4B, 0.2%
Sara Lee (SLE) $8.82, -71%, $6.2B, 4.7%
Citigroup has lost over two-thirds of its market value over the past 10 years and is down about 33% in just the last five days, trading at a market cap of $35B – despite a $25B equity stake by the U.S. government as part of the $700B rescue package and below the $41B market cap of U.S. Bancorp (USB).
The departure of Jerry Yang as CEO of Yahoo! resulted in a short-lived bounce earlier this week which ended abruptly yesterday as Microsoft (MSFT) CEO Steve Ballmer reiterated that buyout talks are finished, but a deal for web search is still possible. This morning, Bloomberg is reporting that talks continue between Yahoo! and Time Warner (TWX) for the latter to sell its AOL stake. Such a deal may be valued at around $6B and would boost Yahoo's display advertising business and add subscribers through email and IM. Yahoo! has seen its market cap dwindle to below $13B since rejecting Microsoft's bid of $47.5B earlier this year.
The list also features some high-yielding tech stocks such as Motorola and Taiwan Semi, with dividend yields of 5.1% and 6.1%, respectively, which are largely the result of share price declines to single digits. Traditional safe have sectors also make the list with consumer staple products maker Sara Lee and medical devices and stent maker Boston Scientific.
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$9.1 (11/20/08)
