Stock Bargains That Have Taken A Beating

new ipo stocks for 2011Friday's employment data was not as transparent and defining as investors were hoping. Thus, since then, we have seen a bit of mix trading in the markets. The market was expecting a 150k increase in Non-farm payrolls, resulting in a change in Unemployment rate to 9.7%. The actual numbers came in with only 103k new jobs for December, but with a much larger than expected reduction in the unemployment rate, all the way down to 9.4%. If anything, this probably confuses investors more, which is why the market seems to be at odds with itself.

Much has changed since last January. As I look through many of the popular stock plays, it is beginning to find the "bargains" and potential over looked stocks that we saw at the beginning of last year. Bank stocks have rebounded greatly. Apple is setting record highs, as Google is once again a rich man's stock play. It amazes me how easy it is to erase all the doubt and concern of complete economic catastrophe and replace it with complete confidence. Sure the market itself is purely driven by investor confidence and action, however, it also historically follows a fundamental pattern. As of now those two factors are inversely pointing to two different directions.

While there are many positive trending fundamental data, there still exists hordes of restricting data that shows a long, clawing recovery back to recent highs. From a consumer confidence perspective, times are better than ever. Retail sales are up, saving rates are declining, and money exchange is once again flowing. However, this is also partnered with an increase in defaulted mortgages (many are no longer paying for their house!), increase in credit default, and record setting government stimulus.

So what are the plays for 2011? For me, that still remains to be seen, as the overall momentum for the first quarter has yet to be established. However, there are places that we can look to still see some potential value. There is one sector that took, not only the back seat, but trunk space as blue chip stocks entered record low prices and caught the attention of all investors. This sector is the IPO sector. Despite economic turmoil, believe it or not, there were many high growth potential companies that were established within the past two years that were cast aside due to investors solely focusing on blue chip day trading. Many of the IPO companies could barely make headlines as they could not compete with possible Bank of America bankruptcy news. Well, we are starting to see this change.

There are a couple of companies worth looking at that have been greatly sold off due to a variety of reasons. In evaluating recent IPO companies, it is important to look at the strength of their balance sheet, as well as their projected growth estimates and market cap. Here are a couple that pass the test and should be in for a great 2011.

Duoyuan Global Water (DGW) sold off to the degree of a 40% price reduction in September of last year, due to accounting problems that were reported from Duoyuan Printing (DYP). Aside from sharing the same Chairman, the two companies share no common relation and are complete separate entities. However, DGW took a beating along with the printing company. Due to the rise in concerns with water quality in China, the water filtering business has extreme promise, which is Duoyuan's expertise.

Also, DGW hired the auditing firm Grant Thornton to help keep their accounting in check and gain confidence from US investors. This should be a strong move in boosting investor confidence and is becoming a popular trend for Chinese companies. DGW took a 67% stock plunge last year and is expected to experience growth near the 22% range.

Another Chinese Water purifying company is Tri-Tech Holdings (TRIT). TRIT took a plunge as well last year as a 2009 IPO with a 40% drop in price. The company, however, is showing strong signs of growth in 2011, with a recent 20% rebound in price. The company expects a monumental 70% growth number for 2011 and is teed up to make a big run if fundamentals continue.

These are definitely two to look at as a long term 2011 play. Overall, the fundamentals seem strong and the P/E ratios look really strong. Sure, investing in emerging markets always bring their own risks, but if you are comfortable with them, these should be considered. Happy Trading.


  1. Anonymous Says:

    So, whats up with DGW ? Its still being beaten down.

  2. Finance Fanatic Says:

    I believe it recently hit its bottom

  3. Trading in Penny stocks Says:

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    When you buy a stock like Wallmart Mcdonald's or Apple computer or Wallgreens you are buying very good well run companies. But because of the popularity of these stocks they are not great value investments. The vast majority of your gains when you buy these stocks comes from dividends not captial gains. In other words when you are investing in a very popular mature company most if not all of your gains comes from your dividends. To get lots of potential capital appreciation from your stocks you must look for companies that are out of favor and not as widely followed as these high profile blue chips. I like many of the suggestions on the list.


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