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Black Friday Sale: Stocks to Buy on the Cheap

Stocks are probably the only thing that people dread to buy when they go on sale.

This is because the herd mentality of investors compels them, time and again, to dump beaten down stocks, without trying to figure out the reason behind the price decline. Often stocks are unjustly punished because of macro-economic factors that may not have any considerable effect on their company businesses.

So, why not buy companies that have gone on sale?

Thus, before dismissing such stocks, investors should take a hard look at whether the market has blown up the negative side of the company and do the fundamentals and prospects still endure? In fact, the low valuation might just serve as the perfect opportunity for investors to procure some of these quality stocks at best prices.

Even Warren Buffet had once said, “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”   

And what better time to grab some of these incredible bargains than on the biggest shopping day of the year: Black Friday.

Black Friday is Here

Black Friday is the day for bargain hunters across the country to grab the best deals before heading into the festive Yuletide season.

Notably, eye-popping Black Friday deals are the most important thing to the shopaholic, next only to the Christmas shopping bonanza. Companies try every trick in the book to sweep buyers off their feet.

When it comes to stocks, volatility has played havoc, so far in 2015, leaving even the most ardent of investors high and dry. However, it is time you looked for inspiration elsewhere. One way of doing this is by adding up what at first glance seems unlikely winners to your portfolio.

Investors should look to strike a bargain this Black Friday by grabbing stocks that have gone on sale.

Cheap Stocks Are Not What You Think

Low valuations do not always mean that the stock has lost all potential. The market, as you know, has a propensity to overreact to both good and bad news, resulting in random stock price movements that do not always rightly match up to the company's long-term fundamentals.

For instance, certain stocks trading near their 52-week lows are, at times, windows of opportunity for patient investors, and offer immense return potential.

Hence, before dismissing these sold out stocks, it makes perfect sense to analyze such overreaction.

5 Stocks on Sale

We have zeroed in on a few stocks based on the following credentials: Zacks Rank #1 (Strong Buy) or #2 (Buy) and current price as a percentage of the 52-week high-low range under 20 (a value of 0 indicates that the stock is trading at its 52-week low).

These stocks have tumbled over the past due to an assortment of reasons, be it company-specific or macroeconomic. However, they hold ample long-term growth prospects to supersede near-term pressure, and ultimately emerge as winners.

Below, we have listed five stocks with excellent prospects that are on sale and could still be worth putting your money in:

San Jose, CA-based Tessera Technologies Inc. TSRA is a provider of back-end technology for semiconductor manufacturing. Though this Zacks Rank #1 company is currently managing to stay afloat, just above its 52-week low of $30.62, the revamping of product portfolio to target the mobile segment should lead to growth.  
 
Notably, the company is shifting its focus to a higher-margin, higher-risk licensing model and therefore the host of patents, new technologies and customer wins are encouraging. Cost savings from its restructuring efforts will also be a positive for the company. Moreover, earnings estimates for 2015 and 2016 are trending up, suggesting further bullishness ahead. What’s more, for 2015, EPS is likely to grow 8.02%.

Shake Shack Inc. SHAK is engaged in the ownership and operation of restaurants. Notably, this Zacks Rank #1 company has been one of the many successful restaurant IPOs in 2015, as its revenue and earnings growth potential has caught investors’ attention. However, the stock is presently near its 52-week low of $38.64.

Menu innovation and limited time offerings are nonetheless expected to keep comps strong, moving ahead. Also, the company is well positioned to cash in on the surging popularity of the U.S. fast-casual market and boost earnings on the back of lucrative store economics, strong brand and solid balance sheet. Upward estimate revisions for 2015 and 2016 earnings further add to the optimism. Moreover, for 2015, EPS is expected to grow a momentous 98.96%.

Headquartered in San Francisco, CA, Fitbit Inc. FIT specializes in wearable fitness tracking devices that record personal data, including the number of steps taken, distance traveled, calories burned, and other wellness related metrics. This Zacks Rank #2 company’s shares are hurtling downhill, toward a 52-week low of $26.46.

However, new features and services, increased brand awareness, expanded global distribution and presence in the corporate wellness market will continue to be the growth drivers, going forward. Moreover, analysts have turned increasingly bullish on the company over the past one month, leading to a sharp spike of 35.5% and 16.0% in the Zacks Consensus Estimate for 2015 and 2016 earnings, which now stand at 84 cents and 94 cents, respectively.

North Carolina-based hotelier Extended Stay America, Inc. STAY has lately been busy renovating its properties, thereby hurting occupancy rates. As a result, this Zacks Rank #2 company is currently hovering above its 52-week low of $16.16. However, we believe the transformational initiatives undertaken by Extended Stay would aid RevPAR at its properties.

We note that the hotels that are already renovated are posting higher revenue growth than the ones that are yet to be renovated. Moreover, earnings estimates for 2015 and 2016 are trending up, suggesting further bullishness ahead. Additionally, for 2015, EPS is likely to grow at a sharp 13.98%, further underlining its potential.

Rouse Properties, Inc. RSE is a real estate investment trust and operates as one of the largest mall owners in the U.S. The stock is presently trading around its 52-week low of $15.06. However, we believe this Zacks Rank #2 company’s acquisition of Carlsbad Mall bodes well and should expand its California portfolio.

Further, the company is planning to renovate and rebrand this 1.1-million-square-foot super-regional enclosed mall in Carlsbad as a one-stop shopping, dining and entertainment destination. The renovation work is anticipated to boost rental rates, occupancy levels, leasing volumes as well as sales productivity at the property, driving significant top-line growth at Rouse. Upward estimate revisions for 2015 and 2016 earnings further add to the optimism. Moreover, for 2015, EPS is expected to grow 8.08%.

Take Your Chance Today

The advice here is simple: buy socks when they are on sale as, contrary to the opinion of the general investor, pricing weaknesses usually provide the greatest investment opportunity.

Investing in the right stock at the right price is the key. Indeed, now’s the time to jump in and ride the anticipated growth of the aforementioned stocks wallowing around their 52-week lows. These stocks promise bountiful rewards this holiday season and have the potential to take your portfolio to new highs.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
TESSERA TEC INC (TSRA): Free Stock Analysis Report
 
FITBIT INC (FIT): Free Stock Analysis Report
 
SHAKE SHACK INC (SHAK): Free Stock Analysis Report
 
EXTENDED STAY (STAY): Free Stock Analysis Report
 
ROUSE PROPERTS (RSE): Free Stock Analysis Report
 
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Zacks Investment Research

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