Mitel Networks (MITL): This $14 IPO is now a $6 busted IPO. Shares are now quite cheap, trading for less than seven times projected fiscal (April) 2012 profits. The dead-on-arrival IPO came public in the wrong year, as it's a play on the SMB sector, which up until now has been in a funk. Mitel sells phone systems and usually sees demand when companies are hiring, with new desk set-ups. But even with sales at depressed levels, Mitel can still be counted on to earn $0.75 to $0.90 a share. If SMB spending really picks up, per-share profits could exceed $1.
Vistaprint (VPRT): The big slowdown in SMB spending really hurt this company, which provides printing and marketing services to companies that are too small to handle their printing needs on an in-house basis. Shares plunged in early August, which looked to me to be a severe over-reaction. (Read Panic Selling Creates Potential for +35% Gains . . . At Least.)
Analysts at Kaufman Bros. see shares rebounding back from a recent $37 to $50 as the company's sales problems this summer prove to be short-lived. "Vistaprint is currently facing a perfect storm, with small business weakness, adverse (foreign exchange) impact and recent execution issues. We note that all these factors are temporary, and should reverse themselves in the future," notes Kaufman's analysts. They predict that shares, which currently trade for 13 times next year's profits, will trade up to a price-to-earnings (P/E) multiple of 20 once these near-term concerns abate.
Action to Take: Spending at small businesses is likely to rebound only slowly into 2011 and perhaps more robustly into 2012. But investors need to look ahead, and these stocks could start to appreciate handsomely, simply on the expectation that SMB spending will eventually rebound -- and the three stocks I mentioned above are good places to start.This article originally appeared on StreetAuthority. Disclosure: At the time of publication, David Sterman owned no positions in the stocks mentioned. >To submit a news tip, email: firstname.lastname@example.org.
Twitter and become a fan on Facebook.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
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.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
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.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV