BOSTON (TheStreet) -- Investors initially cheered the news of a debt deal Monday after six consecutive losing sessions that lopped 4% off of the S&P 500, but many were quick to sell into the market lift.Some value investors, on the other hand, continue to look for attractive long-term opportunities in any exaggerated moves to the downside for quality companies that may result from increased investor uncertainty and fear. Jason Clark, portfolio manager at value-investment firm Al Frank Asset Management in Aliso Viejo, Calif., added to his favorite companies as well as new positions as the markets have tumbled. With a long-term orientation and a contrarian investment approach, Clark is using uncertainty from the debt-limit debate in Washington to his advantage.
Wal-Mart ( WMT) Company Profile: Wal-Mart is the world's largest retail chain. AFAM's Target Price: $76.12 Potential Upside From Current Levels: 44% Clark's Take: Wal-Mart is a U.S.-based company, but with an international presence in Argentina, Brazil, China, Japan, Mexico and South Africa, among other locations, Clark says the company has attractive long-term growth opportunities. "That said, shares have been sluggish as investors have been focused on the missteps that occurred on the domestic side over the last couple of years," Clark says. "We are encouraged by management's strategy to return to 'the glory days' in the U.S., anchored by efforts to aggressively re-emphasize 'Every Day Low Prices,' increase product offerings and improve the price-match guarantee program. Clark also notes Wal-Mart's attractive valuation. The stock trades at less than 12 times forward earnings estimates and carries a price-to-sales ratio of 0.44, both 40% below the 10-year averages. The stock also offers investors a 2.8% dividend yield.
Walt Disney ( DIS) Company Profile: Disney is a media conglomerate best known as the home to Mickey Mouse. The company has key operations in television, theme parks, filmed entertainment and merchandise licensing. AFAM's Target Price: $60.01 Potential Upside From Current Levels: 54% Clark's Take: Disney's move to bring content across digital platforms, like Apple's ( AAPL) iPhone and iPad, has made the stock very attractive, Clark says. The firm counts Disney as a core holding in a portfolio as a representative of the consumer discretionary space. "As a content-oriented company, Disney's top strategic priorities include creativity and innovation, international expansion, and leveraging new technology applications," Clark says. "Along with steady affiliate fee growth and improved theme park metrics, we expect strong growth from new franchise films (e.g. Cars 2), further leveraging of the Marvel franchise and robust international demand. Given Disney's size and financial strength, we would also expect to see additional acquisitions in the years ahead."
Eni S.p.A. ( E) Company Profile: Based in Rome, Eni S.p.A. is an Italian diversified oil major with exploration and production operations in 43 countries. AFAM's Target Price: $77.11 Potential Upside From Current Levels: 78% Clark's Take: Eni shares have faced headwinds due to the company's exposure to Libya. Although near-term geopolitical risks are critical, Clark says those risks are offset by Eni's gas and power business, which he says add a measure of stability since this segment is less sensitive to volatile commodity prices. "Additionally, we are encouraged by the company's exploration momentum with recently announced oil and gas finds in Norway and Ghana," Clark says. "Non-essential divestitures and solid free-cash-flow generation should continue to strengthen the balance sheet, and support (and possibly increase) the dividend. Shares of Eni currently carry more than a 6% dividend yield and trade at a material discount to peer-group average multiples for earnings, book value and enterprise value-to-EBIDTA."
Cooper Tire & Rubber ( CTB) Company Profile: Cooper Tire & Rubber is the fourth-largest North American tire producer, exclusively manufacturing replacement tires. AFAM's Target Price: $34.97 Potential Upside From Current Levels: 107% Clark's Take: Cooper Tire has faced headwinds due to higher commodity costs, with the stock down 27% this year. However, Cooper has so far been able to pass those price increases along to customers with little resistance. Clark says his firms likes that Cooper is in the replacement tire arena and therefore should not be significantly affected by any future struggles of the big auto makers. "In addition, the choppy economy and high unemployment rate have given the replacement tire market new life as data suggest car owners are keeping their vehicles longer," he says. "We are optimistic about the company's growth potential overseas, especially in China, and we like that it is rolling out new higher-margin, ultra-high performance and commercial tires."
STMicroelectronics ( STM) Company Profile: STMicroelectronics is a European-based global semiconductor manufacturer. AFAM's Target Price: $19.70 Potential Upside From Current Levels: 150% Clark's Take: STMicro shares are down nearly 26% this year as the company's wireless joint venture with Ericsson continues to drag on its strong momentum in its other core divisions. "Investors seem to be assigning STM's portion of the joint venture a negative value," Clark says. However, Clark expects that either positive traction with the joint venture or an outright divesture could provide upside to the stock. "With a strong roadmap in products for automotive, consumer and industrial applications, STM is targeting faster market growth in 2011, and the company has proven it is more than willing to shed low-margin businesses," Clark says. "The firm's balance sheet and free cash flow should support the dividend, currently a rich 5.2%."