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

Jensen: Two Cheap Stocks with Growing Prospects

Earnings season kicks off in earnest this week with reports from key S&P 500 components like Citigroup (C), General Electric (GE), Microsoft (MSFT) and others.

This quarter is set to post the first sequential decline in overall S&P 500 earnings in three years. The profit picture has deteriorated significantly over the past four to six weeks. Analysts have ratcheted down estimates for the majority of companies in the energy, materials, industrial and tech sectors on concerns over European, slowing worldwide growth and a strong U.S. dollar. Many companies in these sectors have taken major hits to their share prices as a result. One strategy I am employing is to allocate funds to cheap equities whose earnings estimates have actually gone up over the past three months when the majority of stocks were being revised down. Here are two that I like.

United Stationers (USTR - Get Report) engages in the wholesale distribution of business products in North America. Four reasons USTR offers solid value at less than $28 a share:

  • Consensus earnings estimates for 2012 have moved up 1% over the last three months. Consensus projections for 2013 have moved up 3% over the same time span and now stand at $3.09 a share. The company has beat estimates each of the last three quarters.
  • USTR is selling at less than 9x forward earnings, a discount to its five-year average (11.9), and the stock provides a 1.9% dividend yield.
  • The company managed to raise earnings at better than a 5% annual clip over the last five years despite the economy and the challenges in the office supply market. USTR sports a low five-year projected price/earnings/growth ratio (0.73), and it is expected to have sales growth of 3% to 4% for 2012 and 2013.
  • The five analysts covering the stock have price targets that range between $32 and $57 a share. The stock was above $34 a share earlier in the year.
NCR Corp. (NCR - Get Report) provides products and services that enable businesses to connect, interact, and transact with their customers worldwide including ATMs. Four reasons NCR is a bargain at less than $23 a share:
  • Consensus earnings estimates for 2013 have improved some 8% over the past three months. The company also has easily beaten earnings estimates each of the last six quarters.
  • NCR is selling for less than 8.5x forward earnings, a solid discount to its five-year average (13.9).
  • The median price target for the nine analysts covering the stock is $28 a share. RBC Capital initiated the shares with an Outperform rating in May and J.P. Morgan pushed its price target up to $30.50 from $28 in the second quarter.
  • NCR has good growth prospects. Analysts expect 6% to 9% annual sales growth over the next two years and the company has a five-year projected PEG of less than 1 (.64).

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment 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 serious 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

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


DOW 18,081.65 -121.72 -0.67%
S&P 500 2,096.30 -11.48 -0.54%
NASDAQ 4,966.51 -13.3910 -0.27%

Our Tweets

Partners Compare Online Brokers

Top Rated Stocks Top Rated Funds Top Rated ETFs