• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

The 12 Names of Christmas Part II

One of the secrets to investing success is to fish where they are biting.
By GARY DVORCHAK
Dec 21, 2011 | 06:00 AM EST
Stocks quotes in this article: PMT, SYUT, GMT, THG

On Monday, I ran the screen below to see what were the freshest, most-interesting long names that were percolating to the top of my Christmas shopping list.

I find that one of the secrets to investing success is to fish where they are biting. On the long side, we are looking for names where the company will outperform the market's expectations. The screen identifies these low-expectation names by combining the best earnings-per-share estimate revision trends with low valuation. The top 12 are listed in this table.

We looked at the top four in Monday's post, so today we will move on to the next four. Relative to the universe of stocks, these four also have the strongest upward-pressure on earnings, but are a bit more highly valued. Of course, I would hardly consider a stock trading at 6x as expensive. 

PennyMac (PMT) is the controversial start-up formed by ex-Country Wide executives to buy back the lousy mortgages they originated in the first place.  Leaving aside the moral question of whether they should profit from the destruction they caused in our economy, the fact is that the company's earnings are working, and can be bought cheaply. PMT targets distressed mortgages, with 54% of the portfolio being in foreclosures. Even without capital gains, the 12% yield will supply an attractive return. The stock trades below book, even more so than the rest of the mortgage REIT sector, so there is the potential for an upward re-rating.

Synutra International (SYUT) has been a disaster this year, declining from $14 to $4, but the turn may be here. The company sells powdered milk and infant formula in China. That geography alone explains half of the decline, as no group has been more out of favor than the China names. Synutra last week pre-announced a return to profitability after recovering from the melanine scare last year. Product promotion and the outlook for a solid 2012 Spring Festival should drive the stock higher.

Goodyear Tire and Rubber (GT) is not a hard one to figure out, as it tied to the recovery in auto sales. Volume has not been great, but pricing is firm and the mix is improving to higher-margin tires such as winter treads. There are definitely macro fears, especially if Europe suffers a slowdown. But for now, raw material inflation is receding, which can drive further margin expansion.

Similar to CAI from Monday, Textainer (TGH) leases marine cargo containers.  Although classified as a financial, the company will benefit from steady improvement in cargo transport worldwide as the global economy slowly recovers.  The valuation is probably inordinately low due to the precarious financial state of a few of the shipping lines that lease from TGH.  The coming year should be robust if the liners hang in there and stay current as shipping volumes recover.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, the author had no positions in any of the securities mentioned.

TAGS: Investing | U.S. Equity | Stocks

More from Stocks

Specific Stocks Appear Solid but Upward Momentum Can't Yet Be Trusted

James "Rev Shark" DePorre
May 19, 2022 4:29 PM EDT

I remain convinced that we can't begin to talk about a bottom in the indexes until the S&P 500 is in a technical bear market.

Is This the Time to Buy Costco?

Bruce Kamich
May 19, 2022 3:05 PM EDT

Buy a falling knife? No, but this one's intriguing.

TJX Cos. Is Ignoring the Market's Downdraft

Bruce Kamich
May 19, 2022 1:25 PM EDT

Does this strength have staying power?

These ETFs Will Meet You in the After-Hours Club

Mark Abssy
May 19, 2022 12:30 PM EDT

Let's check three funds that are set to buy the close and sell the open.

After Wednesday's Bloodbath, a Battle Is Brewing in the Market

James "Rev Shark" DePorre
May 19, 2022 11:56 AM EDT

We see traders hunting for an oversold bounce, while investors are dashing for the exits. Here's my take on the wild action so far -- and whether we're in a recession yet.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 01:44 PM EDT STEPHEN GUILFOYLE

    Stocks Under $10 Portfolio

    We're making a series of trades here.
  • 03:07 PM EDT PAUL PRICE

    Why Is Walmart Down Big Today?

    Besides its poor earnings report Walmart was way...
  • 07:14 PM EDT PAUL PRICE

    A New, Very Scary Movie

  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login