Playing an Undervalued Energy Name
Myriad strategies can be used to make money in equities. Aggressive growth investors are always on the lookout for the next Apple (AAPL) or Amazon (AMZN). Dividend investors bet on companies that have a good yield and consistently grow their dividend payouts. Turnaround investors look for companies with good assets, solid cash flow, and a known brand that will benefit from new management. One of my favorite strategies is to find a company that is more than the sum of its parts and is undervalued by the majority of the market.
A perfect example of this is eBay (EBAY). At the start of the year, it trading at just $30 a share. At that valuation, investors were assigning little to no value to the company's fast growing Paypal service. As the value of that portion of the business became more apparent, the market has more properly assessed the earnings power of eBay and the stock now sells for just under $50 a share. It has been one of the best performers in my portfolio so far in 2012. Another stock in my portfolio that I believe has more unrealized value than the market is currently assigning to it is Hess (HES). The company has been rightly accused of having "unfocused" management at times but has a couple of catalysts that I think could unlock substantial shareholder value over the medium to longer term....330 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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