There are times when the market creates great long term buying opportunities - times that make people say, "If I had only bought then, I would have made..."
We are in one of those times now. For the long term investor there are nothing but very attractive long-term values out there. The recent market selloff and panic created these once-in-a-generation opportunities provided we are bold enough to take advantage. Potential long term growth opportunities include: Southern Copper (NYSE:PCU), Baidu.com (Nasdaq:BIDU), and Research In Motion (Nasdaq:RIMM, TSX:RIM).
Turn Copper into Gold
Despite the name, there is more to Southern Copper than copper. The mining company and produces and sells various ore including silver, lead, zinc and, yes, copper. The company is looking very attractive, and from a valuation standpoint it looks down-right cheap. The stock is currently trading at a forward P/E ratio of around 6. It has $1.25 billion in cash and $1.29 billion in debt, according to its most recent quarter. Also, insiders currently own 75.10% of the stock. Finally, Southern Copper pays a dividend of $2.28 or 20.10%. In a nutshell what this tells us is that we have a cheap stock from a valuation standpoint, with a reasonable debt load, lots of cash on the books, heavily owned by the insiders, and paying a great dividend. It is only a matter of time until the market realizes what a great value the company is.
Investors can also earn a great dividend while they are in the stock. At the end of the day you might be able to make a nice profit and dividend. When you put these elements together your overall return has the potential be significantly greater than the overall market averages. (To learn more, see Panic Selling - Capitulation Or Crash?)
Baidu.com's Resilience in the Face of Adversity
Baidu.com can be a volatile stock; however, during periods, of extreme weakness investing in the top Chinese internet search engine might not be a bad idea for the right investor. While the company does have a higher valuation with a forward P/E ratio of 36, it is important to note that it has $281 million in cash and no debt. Baidu also has had a positive income statement with regards to expectations. Over the past four quarters the company has met or beat analysts expectations.
During the last quarterly earnings announcement the company did have some cautious guidance surrounding the potential disruptions of the Beijing Olympics, stating a revenue growth rate expectation of 13-16%. In late July, two Research Analysts with Citi Investments (Catherine Leung and Jason Brueschke) said, "Despite concerns over potential disruptions from the Olympics on Baidu's Q3, the company gave guidance that was reassuring enough to allay concerns over significant impact, in our view." Since July shares have sold off significantly, down almost 30% to the October 14 close of $250.25. The recent selloff might have created an opportunity for investors that can stomach the risk. The next earnings announcement is scheduled for October 22.
Research In Motion has Promise
It is interesting how selloffs like the one we have seen recently cause investors to sell the good stocks along with the bad ones. In my opinion, Research In Motion is a situation where the baby was thrown out with the bath water for no other than fear. The company is currently trading at a forward P/E of around 12. It has $1.55 billion in cash and $6.91 million in debt. From a valuation standpoint what this means is that it only a matter of time until we see the market notice Research In Motion's great balance sheet and solid fundamentals.
As we can see there are many strong companies that have great valuations and have the potential for long term growth. The important thing to remember is that during times like these we must keep our heads when everyone else is losing theirs. By doing so we will look back with satisfaction at the investment decisions we made in 2008.
To learn more, check out Profiting From Panic Selling.