At January's Party, I like Some Wallflowers

 | Feb 01, 2013 | 9:30 AM EST  | Comments
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Stock quotes in this article:

josb

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trlg

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dbd

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crmt

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aapl

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klic

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gm

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deck

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rtn

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noc

The stock market threw a pretty good party in January.

The S&P 500 Index returned 5.18% for the month, including dividends. That was the market's best month since October 2011 and its best January since 1997 (which saw a 6.25% return). 

The wine was flowing and the girls were looking beautiful. But I want to focus on some of the wallflowers. Some 16% of U.S. stocks are hugging the sidelines, not dancing, at least yet. Among them are some bargains.

Is your neighbor going job hunting? Are you? You might need a suit from Jos. A Bank (JOSB). The company is debt free and the stock, down 5% this year, sells for 12x earnings.

If you're not going on interviews, maybe you'll lounge around in your True Religion (TRLG) jeans. Like Jos. A. Bank, True Religion is debt free and sells for 12x earnings. The stock is down more than 7%.

If you're going shopping, you might stop by the cash machine for some folding money. Pretty likely, the machine was made by Diebold (DBD), which is down 5% and carries an 11x multiple.  

Of course, you'll take your car on your shopping trip. But if you live in the South and have bad credit and don't have a car, you might want to visit America's Car-Mart (CRMT). This one is only down 3%, but with the average car on the road 11 years old, it should benefit from some pent-up demand.

Perhaps you'll check out information about cars online first. Apple (AAPL) computers aren't cheap, but the stock -- down 14% this year -- has slimmed down to 10x earnings. Apple has no debt and $196 billion in assets.

Three stocks I own for clients haven't joined the festivities, but I think have a good chance to do so. Kulicke & Soffa Industries (KLIC) makes semiconductor equipment, General Motors (GM) is doing well in the U.S. and in China and Deckers (DECK) is selling UGG boots as a good enough clip so that analysts hope for an 18% earnings increase this year.

Defense stocks are frozen because of fear of sequestration or other budget cuts. Yet several seem like good values, including Raytheon (RTN) at 8x earnings and Northrop Grumman (NOC) at a 9x multiple.

The list doesn't end there. More bargains are available for the plucking. Yes, the market has had four good years and a good month. Yes, the major averages are approaching all-time highs. But those highs were set more than five years ago. It is a reasonably strong market, but by no means bereft of opportunity.

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