Hi there, Fools. I’m back to highlight three stocks that have fallen sharply over the past month. Why? Because the greatest stock market riches are made by buying quality companies: during periods of elevated market uncertainty (like we’re seeing right now); when they’re being overlooked by Bay Street professionals; or when they’re trading at well below intrinsic value.
As Warren Buffett famously said, “Be greedy when others are fearful.”
In this article, I’ll look at three beaten-down stocks that are especially good turnaround bets in 2019.
Time to refuel
Leading things off is Westport Fuel Systems (TSX:WPRT)(Nasdaq:WPRT), whose shares are down 22% over the past month. The alternative fuel systems supplier is now off about 60% over the past year versus a loss of 5% for the S&P/TSX Capped Industrials Index.
Westport is a risky play. But if you’re willing to take on wild price swings, the stock seems like an interesting bet in 2019. In Q3, adjusted EBITDA came in positive for the second straight quarter on revenue growth of 16%.
“This is a result of our full suite of ready-now products that are taking advantage of the shift away from traditional fuels,” said CEO Nancy Gougarty, “providing OEMs and consumers with solutions while continuing our focus on operational excellence.”
At a price-to-sales ratio of just 0.8, Westport’s worth a look.
Steal of a steel
Next up, we have Stelco Holdings (TSX:STLC), which has fallen roughly 20% over the past month. Shares of the steel company are down 35% over the past year versus a loss of 14% for the S&P/TSX Capped Materials Index.
Tariff-related stress weighed heavily on the stock in 2018, but 2019 could provide plenty of price-fueling clarity. In the most recent quarter, Stelco earned $125 million versus a year-ago loss of $30 million.
“I believe as a result of the new NAFTA, or USMCA, it is quite possible that the Canadian industrial markets we serve will actually improve its competitiveness and expand,” said CEO Alan Kestenbaum, “giving us even more demand than just the void left by the retreating supply from the targeted sources.”
At a paltry forward P/E of 3, Stelco is a highly attractive bet on steel prices.
Rounding out our list is BlackBerry (TSX:BB)(NYSE:BB), which has plunged more than 10% over the past month. Shares of the tech icon are now down 43% over the past year versus a gain of 8% for the S&P/TSX Capped Information Technology Index.
Bay Street wasn’t happy with BlackBerry’s most recent quarter, but the numbers actually bode well for the new year. In Q3, adjusted EPS of $0.05 topped estimates by $0.02 as total software and services revenue climbed 10% to a record $219 million.
“We delivered another solid quarter of performance, resulting in year-over-year double-digit percentage growth for total software and services revenue, earnings per share, and free cash flow,” said Chairman and CEO John Chen.
Looking ahead, management sees full-year 2019 revenue growth of 8%-10%, positive adjusted EPS, and positive free cash flow.
With the stock off 50% from its 52-week highs, it might be an opportune time to bet on those projections.
The bottom line
There you have it, Fools: three recently beaten stocks worth checking out.
They aren’t formal recommendations, of course. They’re simply a jump-off point for further research. Trying to catch a falling knife can be extremely hazardous, so plenty of due diligence is still required.
Is one a better buy?
CNRL and Suncor both appear oversold today and offer significant upside potential on a recovery in energy prices. Conservative investors might want to make Suncor the first choice due to its integrated business structure. Otherwise, I would probably split a new investment between the two companies today.
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Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of BlackBerry. BlackBerry is a recommendation of Stock Advisor Canada.