Today I wanted to take a look at 5 stocks that many on the street have left for dead that I think still have a fighter's chance to come out of their current funk. To be included in this list the stock has had to have fallen out of favor in a big way on the street and be down significantly from its all time high. Here's a look at my 5 left for dead stocks that just may have some life in them:
- Brocade Communications Systems (Nasdaq:BRCD) This stock traded above $300 in early 2000, but has traded in a range between about $6 and $10 since late 2002. One thing this company has going for it is solid profitability, they are on pace to earn about 60 cents per share for the fiscal year 2008. I don't believe that the data storage and networking equipment that Brocade provides will ever be not necessary, so its up to the company to cut costs and prove itself as a market leader.
- NutriSystem (Nasdaq:NTRI) This stock was one of the hottest one the street just two years ago, but now no one wants near the thing. The company's ads are all over the place, but their growth rate has slowed tremendously. The company actually recently announced 2008 earnings projections that were higher than analysts estimates, but the market simply shrugged it off as a non-story. The unique product and weight loss offering offers some hope for the future.
- The Home Depot (NYSE:HD) One could argue that this stock hasn't been left for dead, but it sure has been one of the most hated stocks for a long time now. Yes the housing outlook is awful and HD will have a lot of pain from that, but that won't continue forever. Home Depot still has a great presence nationwide and home improvement stores aren't going away anytime soon.
- Lehman Brothers (NYSE:LEH) This may be the most controversial of the five right now because of all the horrible news coming out surrounding this company. Let me be clear here, I'm not making a ringing endorsement of buying LEH now. I simply believe that we are getting very close to that level where the negativity gets overblown. The company has a lot of valuable assets that should turn around over time as long as LEH gets some decent management leadership.
- Starbucks Corporation (Nasdaq:SBUX) Starbucks has had a terrible run since early 2006, but it still has a huge following among consumers. If the company is innovative and grows into areas of the world it has very little exposure to right now it could well be back in favor again in the future.
None of these stocks look to be in good shape right now, but it is my bet that at least a couple of them look a great deal better in a couple of years. These are stocks that have tons of negatives, but still have valuable businesses that can be turned around. Stay tuned, in the coming days I will post a list of five stocks that I believe truly are dead.
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