Yet, it's hard to be equally sanguine on the prospects of the retailer Abercrombie & Fitch (ANF), which is much more beholden to the fickle tastes of teens. The retailer has held up fairly well in this downturn, and analysts believe EPS could still approach $2 this year, but the stock shouldn't be viewed as purely cyclical.
Other stocks on this list can't be viewed through the context of cyclical earnings and instead are pure "balance sheet plays." IAC/InterActiveCorp (IACI) trades pretty much for its cash holdings and is not given much credit for the value of its holdings, such as Ask.com, Citysearch.com, Match.com, CollegeHumor.com and the Daily Beast (which is quickly gaining traction as a rival to the Huffington Post).
Ideally, you can find a stock with a defensive valuation (at or near book value) that is cash-rich and poised for significant upside when the market improves. That would appear to be the case for Ensco International (ESV), an oil driller that will likely have little good news to report when earnings hit the wire this Thursday, Feb. 26.
This is a lousy time for the energy sector, with prices low and drilling activity falling fast. But Ensco is still expected to stay nicely profitable through this downturn. Analysts say the company can earn more than $7 a share this year, but you should assume that the forecast may be too aggressive. Management may well dampen the profit outlook later this week, and that could push shares below the 52-week low. But even if per-share profits only end up at around $3 to $4, then shares sport a reasonable 6 to 8 times earnings multiple on that lowered forecast.
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