Invest in Index Funds
I recommend XIC, XIU or some other low MER% index fund of the whole TSX if you’re Canadian. But for whatever reason I’m going to invest in stocks directly. Here’s my list that I believe are or were trading below intrinsic value:
Bombardier (BBD.B)– bought at $4.59 plus commission last month. Now trading at $5.55 or so now. When I bought, the price-earnings was 8x. Now it’s almost 12x. Waiting for its next quarterly/annual report.
Tidewater (TDW) – bought at $47.17 USD. Now trading at $50 but the rising CDN currency has wiped out most of the real gains. Price-earnings is < 7x.
Precision Drilling (PDS) bought yesterday at $9.10 USD including commission. There is a concern that both Precision and Tidewater have exposure to the price of oil. But at only 6x price-earnings and both being profitable with dividends, they’re serious bargains.
Commonwealth Bankshares (CWBS) – bought this week at an average of $1.84 USD. Reason: it has $1.41 in cash/equivalents alone. The revenues have not decreased since years past, but its loan provisions have eaten into its earnings. Trading at 1/7th of book value.
Tucows (TC or TCX) – bought at around $0.72 CDN but only 4.5% of my stock portfolio (i.e. excluding index funds). At 4x its price-earnings, it reflects that those earnings probably aren’t repeatable. But maybe it is. Call it speculation that earnings will be continued.
Note – Price/Earnings ratio is not the sole criteria, but it’s a popular metric.
Update – the market indices XIC has price-earnings of 31x and XIU has price-earnings of 25x with dividends of 2.7% and 2.4% respectively. Should the earnings expectation not pan out, there may be significant drops.
on January 17, 2010 at 7:01:am
Permalink
PDS is a nice value stock. But it doesn’t pay a dividend at the moment though, as they are focusing 100% on Grey Wolf acquisition debt-reduction.