As 2005 comes to an end, investors look forward to the new year and what it will bring. We try to sell investments that are losing money before the end of the year and sell investments that are making money after the new year. This is so that we can get a tax break for paying early and put off paying taxes. Either way, when you sell your investment, you have extra money to invest. So, you'd need to have an idea of where to put your money.
Most of the time, the 52-week low is a good place to start. Tax loss selling has helped a lot of stocks get on the list. This is great for small investors like us. If there isn't any important news, investing in cheap stocks that get cheaper is a good idea. Turnaround investors look for stocks that are close to their 52-week lows and start researching them. Many of them bounce, giving investors a great return on their money. This year, some examples are ATI Technologies Inc. (ATYT, up 39 percent from the low), Seagate Technology (STX, up 29 percent from the low), Omnivision Technologies (OVTI, up 68.8 percent from the low), and even Maxtor Corp. (MXO, up 45 percent from the low before being acquired). Maxtor's price is now 120 percent higher than its 52-week low.
Even though stocks that hit a new 52-week low don't always go back up, this is a good place to start looking. So, at least some of your prey for 2006 should be companies that have recently hit a 52-week low. Here are some things to think about for 2006.
Pier One Imports Inc. (PIR).
This year, customers are leaving stores that sell furniture and other home decor items. Same-store sales have been going down, and there aren't many signs that this will change soon. Warren Buffett used to own a part of this company. Late this year, he cut back on how much he was betting. Its 52-week high was $ 19.98 per share, but it has recently dropped to $ 8.90 per share, which is a 55% drop.
Shanda Interactive Entertainment (SNDA).
Shanda should be on your watch list if you want to do business overseas, especially in China. It lets Chinese people play online games, especially Massively Multiplayer Online Role-Playing Games (MMORPGs) (MMORPG). Don't be scared by the word. It's basically a place where people can play games online and fight or play with other people. Getting customers to talk to other people is a good way to keep them coming back. Shanda has this chance because of online gaming. From its 52-week high of $ 45.40, it has dropped to $ 15.00, which is a 67 percent drop. Shanda looks good because it has a strong balance sheet (more cash than long-term debt) and its market could grow. Also, the business is making money. If that happens, those piles of cash will keep getting bigger.
Star International Corporation (NAV).
This company makes and sells trucks and buses that are used for business. Paccar, Volvo, and other companies like them are also rivals. It has a good balance sheet and a forward P/E of 6. If it can maintain a 0 percent growth in profits, the stock price won't trade at $ 28.80 for very long.
(VZ) stands for Verizon Communications Inc. The biggest baby bells are having a good year from a business point of view. But worries about competition and a lot of debt have caused its stock price for 2005 to go down. At the moment, each share is worth $ 30.27, and the dividend yield is 5.30 percent. At the moment, the dividend is about half of the company's annual profit, which is a safe amount. If Verizon can keep making money like it has been, the 2006 dividend will be safe. But it has $ 34.3 Billion in debt right now, which is a lot. The company has tried to pay down its debt by using the money it makes from running its business. Long-term debt was worth $44.8 billion on December 31, 2002. So, the balance sheet has actually gotten better, but the stock price has stayed the same.
(FDP) Fresh Del Monte Produce Inc. The people who make and sell fresh fruit are not having a good year. The stock price has dropped by a lot because of problems with pricing and costs that were higher than expected. JP Morgan is said to have been hired by the company's management to run an auction for the company. TheDeal.com says that it can be sold for as much as $1.8 billion. This means that each share is worth $ 30.70. FDP shares recently sold for $ 23.64 each. You could get a 29.9 percent return if the deal goes through next year. But the fact that the management is looking into a buyout shows that things aren't going so well at this company. If the deal falls through, the stock price may go down even more.
