The January 2019 Stock Market Crash: A Buying Opportunity for Investors
The sharp drop in stock prices back in January 2019 has changed many stocks previously considered overpriced into good buys for investors.
The stock market's worst start in 52 years has caused the Casualty List to grow. This list contains stocks that were hurt during the last quarter, and I believe will recover and do well.
The market crash this year has made me feel bad. But it also offered a number of stocks that I think are worth buying. Here are five of them.
The biggest U.S. semiconductor company by sales, Intel INTC , suffered a 24% drop in the second quarter. I believe it is now a bargain at around 6 times earnings, which is what it's going for now.
Intel's revenue has grown at a faster pace than its earnings in the past five years.
Intel manufactures many of its chips in the U.S., unlike companies that rely on Taiwan Semiconductor for their manufacturing, such as AMD and Apple. Intel's factory is located in Oregon, where it employs over 10,000 people.
Intel faces strong competition from Advanced Micro Devices and Nvidia, but it is much cheaper - six times earnings versus 40 for Nvidia and 30 for AMD.
After losing 34% in the quarter, Paramount's stock is trading at only four times earnings.
Warren Buffett, known as the greatest living investor, invested in shares earlier this year. His company, Berkshire Hathaway BRK.B, owns about 10% of Paramount.
The fact that Paramount owns the movie studio Paramount Pictures, the CBS television network, Showtime, Nickelodeon, MTV and Comedy Central is what makes it a possible takeover target. In addition to these assets are its 3,600 movies and 140,000 TV episodes.
In April, Becton Dickinson spinoff Embecta (EMBC) was born into a bear market. Based in Franklin Lakes, New Jersey, it contains the diabetes-care business formerly run by Becton Dickinson.
Diabetes is a lucrative industry. The number of people with diabetes is increasing, especially in the U.S., Europe and Japan, where obesity rates are high.
Spinoffs often have a lot of debt, but Embecta is one that doesn't. It's also cheap, trading for less than 4x earnings after dropping 24% in the second quarter.
The share price of Atlas Air Worldwide (AAWW) has fallen over 28% in the last quarter. The company is valued at only four times its earnings.
If the Federal Reserve raises interest rates, Atlas (a leading cargo carrier) will suffer. But it will not necessarily go bankrupt. In the past 15 years, the company has had only one loss year.
The increase in online shopping should mean more shipping, which is beneficial for Atlas. The stock's low price means that it is undervalued (stock price < book value).
During parts of 2020 and 2021, Overstock.com (OSTK) reached $100 a share. Since then, its price has dropped to about $25. In Q2 it fell 43%.
In 2014, the company became one of the first to accept bitcoin BTC as a form of payment. It has been a major holder of bitcoin, which is why it has been negatively affected by the drop in cryptocurrencies.
The company's merchandise comes from other companies' overstock, so it attracts shoppers looking for bargains. A downturn in the economy could be a boon for the business,
The New Hampshire newspaper
This is the 77th Casualty List column I have written. One-year returns can be calculated for the first 73 columns. The average one-year return has been 16.9%, which compares well with 11.2% for the Standard & Poor’s 500 Total Return Index.
Of the 73 sets of recommendations, 47 have been profitable and 38 have beaten the S&P 500.
Last year, my picks were not very successful. They declined by 24%, while the S&P 500 fell by less than 12%. Poor performances by Thor Industries THO (due to rising fuel prices) and KB Home KBH (because of rising interest rates) did me in.
Keep in mind that the results of my column are hypothetical, and should not be confused with results I get for clients. Past performance does not predict future results.
The figures quoted in this column are total returns including dividends.
I have a financial interest in Paramount Global, which I own directly and for many of my clients. I also own Intel, and have written call options on Intel for my hedge fund.
