While the actual numbers may have been shy of estimates, valuations here are also teetering on being ridiculous. American Axle shares are priced at a mere 8 times earnings on a trailing basis in the last four quarters, and even if earnings shrink per current EPS estimates of $1.35 for 2011 (which isn't likely), the stock's still priced at about seven times forward-looking forecasts. The market seems to have caught its mistake though; the stock has bounced back to $9.96.
Bottom line: this stock has far more upside potential packed into its future.
4. Celestica (CLS): A stock that rallies on good news makes sense. A stock that rebounds despite bad news may not make much sense, but in many regards it speaks volumes more about how investors view the company.
After the electronics manufacturer announced last week it would likely be posting income under analysts' estimates of $0.25 per share for the current quarter, shares fell from $8.84 to a low of $7.96 -- for half of a day. Now it's even higher than where it started that journey.So the company countered the bad news with a rebound catalyst? No. It's just that Celestica is (1) still consistently growing earnings on a year-over-year basis, and (2) is still bargain-priced at less than 10 times 2011's anticipated earnings. 5. Excel Maritime Carriers (EXM): Finally, there's a difference between "based in Greece" and "dependent on the Greek economy." Excel Maritime Carriers is only guilty of the former, but the stock has taken several lumps in the past few months, suggesting investors are assuming the latter. That's not to say the company escaped the global recession unscathed -- Excel Maritime did indeed dip into the red throughout most of 2009. In the last three quarters though, operating profits have not only improved, they've been positive, and the company appears to be coming out of the storm. In fact, the company topped last quarter's EPS estimate of $0.10 with a per-share profit of $0.11. While one -- or even three -- solid quarters don't mean everything, the plausibly forecasted (2011) P/E of 8.8 goes a long way toward that end. Action to Take: Investors don't have to choose strictly between stability and performance. The narrow band of stocks priced between $5 and $10 offer a very rewarding balance of both. This article originally appeared on StreetAuthority. To read more articles from James Brumleyon StreetAuthority, you can visit this link. Disclosure: At the time of publication, James Brumley owned no positions in the stocks mentioned.
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