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TheStreet Open House

5 Oversold Stocks Trading at Discounts

AK Steel

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I can appreciate the concern regarding economic growth especially globally. All you hear about are attempts to slow China's growth, loan defaults by governments in Europe and massive debts in the U.S. No wonder steel (the engine of any economic growth story) stocks are struggling. AK Steel (AKS) shares are down almost 13% since hitting a short-term top of $16.99 per share on April 27. Such selling is stunning considering the operating results of the company in the most recent quarter. For the period ended March 31, the company made a profit of 8 cents per share, compared with Wall Street expectations for a loss of a penny per share.

That is a significant beat. Clearly the current pricing of the stock is based on fear regarding the future. Thus far, that fear has not materialized in the form of analyst estimates. For the full year ending December 31, analysts expect AK Steel to make a profit of $1.23 per share. For the 2012 year, the estimate is for a profit of $1.71 per share.

Any time you can buy 40% growth or more for just 12 times current-year estimates, that has to be a good thing. The valuation is frankly too good to be true.

Look for this stock to recover lost ground in a short period of time. It won't take long with this one.

AK Steel shows up on a recent list of 10 Steel Stocks With Upside.

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