Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

5 Bottom-Up Bargains


It's been quite a bull market run over the past four years, even though it hasn't felt much like a bull run. By looking at specific companies, you can still find value in some of the top sectors moving forward.


By the end of the 1990s, chasing growth stocks' momentum was many investors' strategy of choice. Companies with reliable revenue and low debt had enjoyed their best run in history. But by that time, few paid attention to dividends or value, which had been popular early in the decade when fear rather than greed was the dominant market emotion.

The good news is that we're about as far away from that kind of bubble as is possible. There's still value to be had in many corners, but after nearly four years of good times, you won't find it unless you take a bottom-up approach-i.e., scrutinize companies' underlying businesses on their own merits.

The best values are always in unloved sectors that investors have abandoned because they look bad from 30,000 feet. Sector affinity and aversion have become particularly pronounced in recent years, as exchange traded funds have proliferated. Stocks in a sector get bid up and sold off in unison to a much greater extent than was possible in the past.

One sector that's taking hits now is energy, the subject of our second article. But I see many positive trends in energy, which is why I'm adding a new energy company to the Income Portfolio: Super oil Total (NYSE:TOT).

Energy has been in an uptrend since 1998, when oil prices bottomed at less than $10 a barrel and natural gas last sold for less than a buck per million British Thermal Units. However, global growth worries and the North American shale boom have raised doubts about energy companies from wellhead to burner tip.

Energy still has a lot left in the tank. With large and reliable companies such as Total underwater for the year and featuring growing yields of 6% and up, you get plenty of bang for the buck while still playing it safe.

The 2008 crash provides the best possible crucible for determining companies' reliability and safety in the worst possible environment. Nearly every company's stock lost ground during the worst of that crisis. But companies that held it together as businesses then are very solid bets to do so in a future crash.

As noted above, revenue reliability comes in handy during a crisis. Some investors (as well as regulators) were surprised that regulated gas, electric, and water utilities demonstrated this reliability in 2008. But their strengths won't be so easy to ignore the next time around, especially since nearly all have spent the last four years cutting debt and operating risk.

< Previous
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos