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Where I see value:

You’ve no doubt heard through the news and various media about last week’s nasty correction of the stock markets and what potential outcomes, reasoning or changes to the economic climate this may point towards; the list can be endless if you believe everything that you hear. If you’re a short-term investor or someone who has yet to develop a patient & focused discipline…then you may find yourself checking your portfolio daily to see what the “damage” has turned out to be.

If, on the other hand, you are an investor like myself; you look to these corrections as simply a healthy return to the regular economic cycle and an excellent opportunity for picking up battered & bruised companies you’ve possibly been eyeing for some time.

Now let me make a few things very clear: battered and bruised doesn’t necessarily mean anything that’s cheap. Many companies are cheap for a reason, just as many companies are expensive for a reason. But a quality company, with solid fundamentals, trading at a discount to its own intrinsic value or a discount to its peers at times will offer an opportunity that is just too good to ignore.

If you’re not a stock picker per say and find that fundamental indexing is your forte, then you should seriously be considering adding to holdings in broad index funds or ETF’s after a correction like this. They can be an excellent opportunity to average down the cost of your initial investment and take advantage of a market on “sale” if all fundamentals point to a positive. As I stated in my post a few days ago – the market in my opinion is simply correcting back to a more conservative level in light of news of the credit market tightening. Recent M&A speculation had priced an excessive premium into the market seen in stocks recently and with lenders focusing more on debt quality & margin of safety, that premium has now been eliminated or drastically discounted.

Here’s a quick list of stocks that I’ve been looking at with interest and picking up on weakness both during this week and over the last few months:
* Bold represents most undervalued per group

Large Cap-Dividend:
– BNS
MFC
– NA
SLF
– TOC

Healthcare:
– AZN
– BAY
– CL
– GSK
JNJ
– WYE

Core Value:
ALL
– CAS
– GRO.UN
– MGO
– WIRE

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{ 2 comments… add one }
  • moneygardener July 30, 2007, 7:58 pm

    I agree with you on SLF, MFC, BNS, and JNJ.

    I wonder what your thoughts are on BAC?

  • Nurse B, 911 July 30, 2007, 8:26 pm

    I’m sure I can post something here & over on CBF since I’ve been doing research on both BAC & WB recently.

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