Toyota, Honda, Verizon Are 3 Underperformers Ready To Shine

NEW YORK (TheStreet) -- Stocks are likely to continue rising over the long term but there is also a rising probability of a near-term correction. Expectations of further significant gains in the mid-term is waning.

What's a cautious and value-oriented investor to do? Selling in an up-market is likely to cause underperformance while staying fully invested could cause some stomach-churning moments.

The remedy: Seek the stocks that have underperformed this bull market. That means Toyota Motor (TM) , Honda Motor (HMC) and Verizon (VZ) . 

Read More: 10 Stocks Carl Icahn Loves in 2014

Why are they underperformers? The trick is to identify those stocks that have done so as a result of the market mispricing the stock, not because of a systemic issue with the company.

For those willing to do their homework and stick with a strict and consistent investment discipline, these three underperformers could shine over the next 12 months. 

Toyota: The company's troubles have been well documented over the past couple of years. Its shares, at close to $116, are down over 5% for the year to date. Yet, consider these points:

  • Toyota has managed to beat earnings estimates over the past two quarters
  • TM still (only) has a trailing P/E of 10.5.
  • With a dividend approaching 3%, Toyota could be a smart investment over the next few years.

Honda: At close to $34, the stock is down over 18% for the year to date and 11% for the past 52 weeks, in part as a result of a string of disappointing earnings reports. What's to like?

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