This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Your Homework: Prep for the Market Turnaround Now

Stocks in this article: ESIO SCMR DAR

Editor's note: This was originally published on RealMoney. It is being republished as a bonus for readers. To subscribe to RealMoney, click here

One question I am frequently asked is why I spend any time looking for long ideas and discussing cheap stocks when I think the market is going lower. The answer is very simple: At times I am going to find stocks so cheap I want to own a little regardless of market outlook.

When I find a stock selling for less than net cash or way below tangible asset values, I want to own a little. History and experience have taught me that stocks such as Electro Scientific (ESIO) should just be purchased regardless of what the market may do. Here you have a stock at half of book value, near cash levels, and with David Nierenberg as a substantial shareholder. I will take my chances relative to the market. My margin of safety is so large that I am comfortable owning it.

The other reason is that although I was politely asked to leave the local Cub Scout troop as a boy for various offenses involving firecrackers, pumpkins and a pack leader with no sense of humor, I do admire the motto -- "Be Prepared." I do think this market is going lower. The economic and financial conditions justify lower prices in my mind. I also have no idea how long it will take to work down to levels that would make me a buyer. It could just continue as we have so far in 2009 -- ticking down day by day. We may have a cataclysmic event that causes a steep one- or two-day sell off. The time to shop for a fire extinguisher is not right after you spill grease into an open flame. I want to be ready with a list of stocks with solid asset values and recovery potential.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs