"We simply attempt to be fearful when others are greedy
and to be greedy only when others are fearful."-- Warren
Buffett
Of all the Oracle of Omaha's orations, this one holds a
special place in Foolish investors' hearts. When looking to
bag a bargain, a panicked sell-off by jittery investors
offers you a great chance to snap up stocks on the cheap.
In the short term, professional traders' pessimism can
become a self-fulfilling prophecy. Desperate institutions
lower their asking prices to get rid of a stock, prompting
buyers' bid prices to fall in tandem, creating the very price
decline that both sides feared in the first place -- until
the selling stops.
Until it does, savvy investors can "get greedy," snapping
up bargains from these fearful sellers. (Assuming they really
arebargains.) In today's column, we'll see which
stocks Wall Street's motivated sellers are most frantic to
unload. Once we've compiled this shopping list of potential
picks, we'll check them against the collective intelligence
of
Motley Fool
CAPS.
Today's contenders include:
Stock
Recent Price
CAPS Rating
(out of 5)
Allied Irish Banks (NYSE: AIB)
$5.02
****
Bank of Ireland
$9.48
***
NVEÂ Corp (Nasdaq:
NVEC)
$36.74
**
US Airways  (NYSE:
LCC)
$2.91
*
MBIA
$3.95
*
Companies are selected from the
"Institutional Ownership Down Last Month" list published on
MSN Money on the Saturday following close of trading last
week. Recent price provided by Yahoo! Finance. CAPS ratings
from
Motley Fool CAPS
.
Up on Wall Street,
the pinstripe-and-wingtip crowdcan't sell these stocks
fast enough. And they may be right. Down here on Main Street,
we've given these same stocks a lookover, and
we sure don't like what we see. Debt
andlosses at MBIA and US Airways -- what's there to
like about that?
Seriously -- that's not a rhetorical question today,
because as it turns out, CAPS members' top-ranked stock has
no profit in the trailing twelve months either.
The bull case for Allied Irish Banks
Why invest in the notorious Allied Irish? The
first arugment comes from
expatbint, who argues that the "Irish Gov. can't let this
one
slide into oblivion." Call it a Celtic variant on "
too big too fail."
And expatbint may be right. Because as
Gonzhouseinforms us, just like TARP here at home,
Ireland's own "bad-asset program-
NAMA-will relieve [Allied Irish] of toxic waste at less
than 30% hit. [Allied Irish] is going back to capital markets
and they are getting a warm reception. It won't be too long
before dividend is reinstated."
With a little help from NAMA, CAPS All-Star
rxmichiganbelieves that "this bank has seen the worst and
will
begin to improvefrom here out. Again out of the US
economy so I can play the value the euro over the Dollar over
the next 5 years. That alone may outpace the S&P
average."
But is it enough to justify buying a profitless bank?
Moreover, a bank located in a foreign land, where you lack
firsthand knowledge of the company, don't know what customers
think of it, where really, you're flying blind, with only
"the numbers" to guide you?
Depends on the numbers
If the stock looks cheap enough, maybe it
isworth taking a flyer. And in Allied Irish's case,
the numbers are pretty high -- and pretty darn low. See how
the Irish banker compares to a few of our Stateside
brand-name banks:
Stock
Return on
Assets*
Return on
Equity*
Current Price-to-Tangible
Book Value
Allied Irish
1%
12% Continued... |