Can These Three Stocks Recover in 2013?

NEW YORK ( TheStreet) -- Now that the new year has arrived, I've been on the lookout for stocks that have taken a beating but may still rise enough from current low levels to make savvy investors some money.

Here are my top three selections.

Microsoft ( MSFT)

Microsoft has been a disappointment. Its inability to compete against Apple ( AAPL) and Google ( GOOG) in the realm of mobility has been its downfall.

But that doesn't mean the company lacks value. The question though, is whether current management knows how to harvest the value that is left. I'm not certain it does.

Even so, I'm willing to consider that today's version of the company is more about steady streams of cash flow and less about steady product cycles, much to the dismay of Wall Street. The stock is not sexy, as its recent earnings report proved. When it reported 2013 fiscal first-quarter results, Microsoft missed by top- and bottom-line estimates.

That came after Microsoft reported its first-ever quarterly loss as a public company, in the fourth fiscal quarter of 2012.

There have been plenty of disappointments, and they are all priced into the stock.

Things can't possibly get any worse. And given the company's cash hoard, there seems to be minimal risk to the downside. I'm placing my bets here at $26 a share. The stock should be able to reach $30 by the end of the second quarter.

Intel ( INTC)

It's only fitting that Intel follows Microsoft as both remain leaders in a dying PC industry. However, Intel has all of the makings of a successful turnaround story. The company earned $2.83 billion in its most recent quarter, enough to beat analysts' estimates.

The company has been reinvesting heavily in its business, including R&D in core capabilities such as security while extending its process technology leadership. Unfortunately, nobody cared. Investors have grown impatient with the company's slow response in the mobile race. But it may be time to believe.

According to a recent TechCrunch article, investors should expect LTE-compatible chips from Intel sometime in 2013, which will allow the company to power more smartphones and seek more growth opportunities in tablets.

Plus, there continue to be rumblings that Apple might adopt Intel in its devices. Although Intel has yet to confirm these rumors, as with Microsoft, things can't get much worse with expectations already so low.

In the meantime, the company has given investors reasons to remain patient by announcing a pretty significant share buyback. The last time Intel bought back shares, the stock surged more than 40% in two quarters. At $21 per share, the stock deserves a long look and offers 20% premium potential on the basis of the share buyback.

Dell ( DELL)

Last on the list is Dell, a company that I have always wanted to like. Dell has been down, but the company has not sat waiting for defeat to come its way. Dell has responded by spending $2.4 billion in M&A acquisitions on names such as Quest Software ( QSFT). This deal arrived shortly after Dell buying SonicWall for an estimated $1.2 billion.

The company is trying to build its software portfolio by buying up niche companies, hoping to offset its deteriorating hardware/PC businesses. Unfortunately, this has not worked so far, and the Street has gotten impatient. In 2013, if Dell can find new ways to grow its high-margin segments (which include networking and storage), it can harvest some value that left in it business.

Dell also must figure out ways to better leverage its recent acquisitions and address a new mobile strategy. This is the only way it can effectively fight back. I've said this before, Dell should do something radical and buy Research In Motion ( RIMM). It makes too much sense not to happen. With RIM's existing enterprise footprint, Dell would immediately become relevant again.

The company has spent billions over the past several years acquiring companies that have done little to lift its profile. Dell should realize a change is necessary. Nonetheless, with minimal expectations in these shares, they are just too cheap to pass up. Even on the most conservative assumptions, the stock is worth $15, which represents 36% premium to recent levels.

At the time of publication, the author was long AAPL.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Richard Saintvilus is a private investor with an information technology and engineering background and has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.

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