The market hasn't been too kind to most stocks lately, but a few of them have suffered more than their fair share of selling. Rather than grouse about lost ground though, investors should be using these steep selloffs as entry opportunities. Here are four badly-beaten-down names to consider, as the bullish truth should be coming to the light soon.

ARTICLE: Barking Up The Dogs Of The Dow Tree

Target Is Still on Target
Since the January 3 peak, Target Corp (NYSE:TGT) shares have lost nearly 20% of their value, mostly prodded by December's revenue shortfall. Even though the news of its Canadian expansion was well-received, it didn't actually stop the bleeding.

At some point in time though, the market has to start appreciating the fact that even with one month's sales coming up short, the cheap-chic retailer is still growing earnings, and just logged its best annual profit. The entry into Canada can only improve those numbers.

Finisar Over-Reaction
In one of the more dramatic one-day meltdowns we've seen this year, Finisar Corp. (Nasdaq:FNSR) plunged 38% on news that the current quarter's earnings would be about 30% shy of estimates because of slowing demand in China. Fair enough. As Credit Suisse's William Stein points out though, the soft patch is likely to be short-lived - bandwidth is still in short order, and should still drive customers to the company's optical connectivity hardware.

Copper Disconnect
It should be no major surprise that copper mining stocks and raw copper prices ebb and flow together to some degree. In fact, it's not even a complete shock that Southern Copper Corporation (NYSE:SCCO) topped out on January 3 even though copper spot prices didn't peak until early February - stocks can lead commodities as well as lag them. What is a surprise, however, is how alarming the 20% correction has been to investors. (For related reading, see Connecting Crashes, Corrections And Capitulation.)

The selloff has less to do with the waning price of copper, and more to do with the fact that SCCO shares turned in a red-hot 86% rally over the last five months of last year, and were overbought as a result. Copper prices are only off about 7% from their peak, and remain practically in line with levels that have finally started to push Southern Copper's profits up again.

Mixed Message
Since mid-December, Royal Caribbean Cruises (NYSE:RCL) shares have fallen 27% on a disappointing Q1 outlook despite topping Q4's earnings of 13 cents by posting an EPS of 20 cents. The pullback has priced RCL at a palatable forward-looking P/E of 12.4. What's going mostly unappreciated, however, is that Royal Caribbean has topped earnings estimates in five of the last six quarters, including the most recent one.

Just for the record, it's not like Royal Caribbean has been on target with the outlooks, for better and for worse. It was only a quarter earlier the company was expecting record earnings for 2011; what happened to that? Now that concern has turned into hysteria, we may be at the bottom. (To learn more, see Market Bottom: Are We There Yet?)

The Bottom Line
It's certainly easier to buy a stock that's on the way up rather than one that seems to be on the way down. Veteran traders know, however, that the biggest gains come from making bold - and often contrarian - moves. All four of these names are in the gutter now, but have the right stuff to hammer out rebounds soon.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    Will J.C. Penney Come Back in 2016? (JCP)

    J.C. Penney is without a doubt turning itself around, but that doesn't guarantee the stock will respond immediately.
  2. Stock Analysis

    Why did Wal-Mart's Stock Take a Fall in 2015?

    Wal-Mart is the largest company in the world, with a sterling track-record of profits and dividends. So why has its stock fallen sharply in 2015?
  3. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  4. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  5. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  6. Investing

    Retailers Rebel Against Black Friday: Bad Move?

    The Black Friday creep may have hit a wall as some stores are shutting their doors on Thanksgiving and even Black Friday to give employees the day off.
  7. Economics

    Is Wall Street Living in Denial?

    Will remaining calm and staying long present significant risks to your investment health?
  8. Stock Analysis

    When Will Dick's Sporting Goods Bounce Back? (DKS)

    Is DKS a bargain here?
  9. Investing News

    How AT&T Evolved into a Mobile Phone Giant

    A third of Americans use an AT&T mobile phone. How did it evolve from a state-sponsored monopoly, though antitrust and a technological revolution?
  10. Stock Analysis

    Home Depot: Can its Shares Continue Climbing?

    Home Depot has outperformed the market by a wide margin in the last 12 months. Is this sustainable?
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center