Bad News Sends Stocks To Woodshed
With a buy-and-trade strategy the first decision an investor needs to make is whether or not the stock-specific negative news is a game changer. Do you wish to continue to own the stock? If the answer is no, simply get out on the old theory that your first loss may be your best loss. If this becomes your decision don't look back as there are thousands of other stocks to choose from.
One reason to stay with a woodshed stock is that www.ValuEngine.com still rates the company with a five-engine strong buy rating, or a four-engine buy rating. Regardless, if your investment decision is to stay with a woodshed stock you must then decide on a price level at which to try and catch the falling knife. This could be weakness the 50-day, 200-day or 200-week simple moving average, or a prior low. With my methodology, it could be a buy on weakness to a value level from my proprietary analytics.
The nine stocks profiled here include an update on the four I profiled a week ago in my post, 4 Stocks Taken to the Woodshed.
All nine are just below their fair value price with seven of nine undervalued by double-digit percentages.
Even after going to the woodshed we have one stock rated at strong buy, six rated buy and two rated hold.
Four of nine stocks are higher over the past 12 months despite being taken to the woodshed. One is still up 70.2% from a year ago. Five have lost ground by more than double-digit percentages, with one down 34.3%.
All nine are projected to be higher over the next 12 months by 3.7% to 12.4% in an environment expected to be less volatile.
Only one stock has a single-digit trailing 12 month price-to-earnings ratio, while three have P/E above 20.0.
Only one stock is above its 200-day SMA, which held as the price at which to buy to catch that falling knife.
Reading the Table
OV/UN Valued: The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.
VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.
Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.