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3 Stocks That Are Begging To Be Bought

by: Faisal Laljee October 05, 2008 | about stocks: AAPL / GOOG / PCLN    
Faisal Laljee

Faisal Laljee

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This market is really fickle and the bailout package seems to have done nothing to appease the market. Last week, while the market was waiting for the House to approve the new bailout plan, the Dow rallied 250 points. Once it was approved, it turned negative within minutes. We are definitely not out of the woods, but certain stocks are just begging to be bought.

Now before you go out and buy these stocks, know that as I mentioned earlier last week, no one knows which way the market is headed. So if you don't have a stomach for risk, it's better to steer clear of the market until the fog lifts.

Priceline.com (PCLN) - This company has been reporting fantastic quarters and has been consistently beating expectations. It has grown its overseas businesses in Asia and Europe and has become very efficient at what it does. The stock trades for less than 9 times next year's earnings with a PEG of 0.4. At the same time, the company is growing sales and earnings at 40-50%. Without a doubt, this is one of the best bargains out there. The stock is trading almost 60% below its all-time high of $140 reached less than five months ago. Yes, gas prices are high. Yes, the economy is bad. Yes, liquidity and credit are scarce. But Priceline is the Costco of travel. People need to take vacations from their daily struggles and while they will spend much less, they will not entirely stop travelling. Even those with deeper pockets, who previously booked directly through their travel planner or through catalogs will now look for bargains like those on Priceline.com. Moreover, Priceline.com stands to take market share from its competitors like Orbitz.

Google (GOOG) - Google has gone from being the growth story of the decade to the fledgling large-cap that can't seem to get out of its own way overnight. At current levels around $400, it sits over 40% below its all time high of just over $700 reached last December. The company has innovative management, great people, and superior technology than any Internet/tech/media companies out there. 18% of all college graduates surveyed want to work at Google. The stock trades at a PEG ratio of less than 0.7, has $12 billion ($40 per share) in cash and no debt. That means it trades at 15 times next year's earnings. Talk about value. Some might argue that advertising revenues will hurt Google and they are right. But Google is not the kind of stock you buy just for their advertising revenue. It is not a pure-play media giant. Chrome, their new browser, serves a very different market. Android, their mobile operating system is also set to capture a different aspect of the market. Google is a company that is continuously diversifying its business. Without much publicity, it has a plethora of web-based business and productivity applications.

Apple (AAPL) - Apple is at levels it was before it launched the original iPhone. iPhone is a game changing device that has caused a ripple effect among all cell phone manufacturers. Not a week goes by when we don't hear about a potential iPhone killer, what with Samsung, Nokia, LG and HTC, all trying to come up with devices similar to the iPhone. The stock trades at 12 times next year's earnings if you take out the $23 per share in cash. Mac sales are soaring, and yes while a weaker economy means less spending, Apple will still take market share from the PC makers like Dell and HP. More and more students around campus now carry Macs, more and more people are spotted with Macs in cafes and bookstores. I can't imagine that Apple is not a double from these levels in two years.

There are more such gems like China Mobile (CHL), US Steel (X), Vale (RIO), and Research in Motion (RIMM), but I will present some more such stocks in the near future.

Full Disclosure: I own AAPL, GOOG, PCLN, X and RIMM but my position can change anytime without notice.

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This article has 8 comments:

  •  
    Oct 05 06:10 PM
    I think at any level goog. is a fantastic buy. It is constantly improving. I truly feel it is the best buy on the entire stock market. It would not suprise me to see it reach 1,000. dollars. jerry w.
    Reply
  •  
    Oct 05 06:31 PM
    Google stock ain't going up for a long time! The $700 price a few months ago may never get to those levels again.

    The problem with Google is they have one source of revenue and one stream of profits and Wall street knows there is only so much you can do with a one trick pony.

    All of the other projects that Google has going on today, don't amount to 1% of either revenues or profits, according to the most recent 10-Q report filed by Google after last quarter's profit announcement.

    Google stock will never get to $1000 per share unless and until Google Apps, YouTube, etc can generate 5-10-20 percent of revenues and profits at Google.
    Reply
  •  
    Oct 05 11:15 PM
    Sorry mate, I'm of the opinion that you've severely underestimated the severity of the conditions of the overall market. Apple isn't a buy until it reaches $45 to $50. Google is a buy at $130 to $150. And Priceline will dump another 40 to 50%, at least, from current levels. All continue to be short candidates. The market has been using these as stores of value within their portfolio for years. As the market continues unwind and convert to cash, these marquee names are the first to be liquidated. There are an abundance of sellers at the moment. Don't believe me? Let's talk in a month.
    Reply
  •  
    Oct 06 02:42 PM
    With the slaughter today, I'm going long aapl, rimm, fcx and pot at the close, all good companies that should be in for nice short term bounce.
    Reply
  •  
    Oct 06 03:52 PM
    AAPL is looking pretty good right now. With iPhone sales reaching there 10M goal, I'd say its a great time to get in, although I think by the end of the week it may go even lower.
    Reply
  •  
    Oct 07 03:38 PM
    Can I sell you AAPL and GOOG?
    Reply
  •  
    Oct 08 01:10 AM
    Have you thought at all about what the strong dollar does for the overseas earning of companies like Google?
    Reply
  •  
    Oct 11 03:02 AM
    I like TXN, been nibbling here. Dominant, no debt. Just my opinion.
    Reply
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