Heading into a holiday-shortened week, the major U.S. indices are at or near multi-year highs. Typically, the strategy of buying near highs is not the best, however there are a handful of stocks that are sitting at levels that are attractive as buying opportunities. Here are the top four on my list.
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Intel (Nasdaq:INTC) is one of the worlds largest semiconductor companies that are used in everything from computers to consumer electronics to servers. The stock recently broke out of a narrow trading range to hit the best level in over fours years, on the back on heavy volume. From a technical perspective, the stock is flashing a buy signal. When analyzing the fundamentals, there are two numbers that stand out. The dividend yield of 3.1%, well above the 10-year Treasury yield, and the PEG ratio of 0.97. Usually, I will avoid the megacap stocks, however all signs are pointing to higher prices for INTC.
IAC Interactive (Nasdaq:IACI) is another technology stock that has its interests in the Internet. The company owns and operates some well-known websites such as Ask.com, Dictionary.com, Vimeo.com and Match.com. After breaking out to a new all-time high a few weeks ago, the stock has pulled back and retested support, which is a bullish technical signal. Fundamentally, IACI trades at a good valuation with a PEG ratio of 1.19 and a minimal dividend yield of 1.0%. The support ranges between $43 and $44, offering an attractive entry at the current price. (For additional reading, check out 5 Must-Have Metrics For Value Investors.)
Flotek Industries (NYSE:FTK) develops and supplies products and services to the energy and mining industries. The company is split into three divisions: chemicals for drilling, drilling and artificial lift. In early 2012, the stock broke above resistance near the $10 area and rallied 30% in the following weeks. The stock has now pulled back to the breakout level at $10 and is offering a technical buying opportunity. Fundamentally, the stocks trades with a PEG ratio of 0.94 and it is well positioned for more drilling in the U.S., as the search for more natural gas and oil continues.
Monsanto (NYSE:MON) is a major agricultural chemical company that operates in two divisions: seeds & genomics, and agricultural productivity. The company is known for its seeds, as well as herbicides such as Roundup. The stock broke out to a new 52-week high recently, when it passed the $76 area. Since rallying on the breakout, the stock has pulled back to support, and is now setting up technically as a buying opportunity. The valuation is not as attractive with a PEG ratio of 2.01 and a dividend yield of 1.5%, however the sector has strong momentum.
As I mentioned above, the market is near highs and could be setting up for a normal pullback in the coming days/weeks. That being said, the stocks in this article are sitting near support and it is OK to give them a look even with the market near highs. Finally, make sure to use stop-loss orders to protect against a major pullback. (For more, see Blending Technical And Fundamental Analysis.)
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At the time of writing, Matthew McCall did not own shares in any of the companies mentioned in this article.