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!

3 Recovery Stock Plays

Stocks in this article: CAT PNC LOW

It's the sixth-largest U.S. bank, with plenty of exposure to the Midwest -- a region heavily aligned with the manufacturing industries, which have seen significant improvement (autos, industrials and factory orders are all vastly improved). As a result, PNC revenues are poised to grow faster than those of its peers. The company also has sizable cross-selling synergies and opportunities from its 2008 acquisition of National City; it has already taken $1.8 billion out of costs.

As the economy improves, credit costs will continue to decline, reserves will be released and the company can focus on lending -- commercial and industrial loans improved 4% in the last quarter -- and I expect this segment to continue to improve in the recovery. The stock trades at a discount on a price-to-book and price-to-earnings basis from historical levels, and PNC will be one of the first to raise its dividends -- another positive catalyst.

Finally, I like Lowe's (LOW). It's one of the largest home improvement companies in the industry with a specific emphasis on retail Do-It-Yourself. I like this stock for two main reasons -- housing is bottoming, and internal restructuring will improve the company's overall competitiveness, earnings, revenues and margins. The restructuring program is focusing on improving its supply chain efficiencies, products, pricing and service.

Lowe's has also taken aggressive action in cutting costs, a focus that was evident in its last quarter, with a 60-basis-point improvement to its gross margins (ahead of Home Depot's (HD) 24 bps). Lowe's will generate $10 billion in cash over the next five years, which will be used for buybacks and dividend increases. Trading at a 10% discount to HD, the stock is a cheap way to play the recovery in housing and in the company itself.

Readers Also Like:

Stephanie Link is the director of research & vice president of strategy for She is the co-portfolio manager for Jim Cramer's premium investing service, Action Alerts PLUS and works daily on the strategy and stock picks chosen for the portfolio. Stephanie is also responsible for recruiting talent for the paid sites including options, technicians and fundamental contributors. Prior to joining, Link worked on Wall Street for 16 years. She spent nine years at the Prudential Equity Group as a managing director in U.S. institutional sales and as the New York sales manager covering top national accounts. She was the managing director of equity research in her final year at the firm. Prior to that position, she worked at Dean Witter as an institutional sales person for six years. Link's investment specialties include large-cap core stocks as well as value ideas.
2 of 2

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 17,803.16 +25.01 0.14%
S&P 500 2,067.75 +6.52 0.32%
NASDAQ 4,757.5990 +9.2030 0.19%

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