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Russell Pearlman, SmartMoney senior markets editor, on how to find "loser" stocks to invest in that will soon make a comeback.
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Another man's treasurer of that students and I'll tell you after the break after you explain PetSmart to me certainly it -- when it comes to stock it -- -- a it's -- ended December issue of Smart money.
-- today are asked topped the value investors in name they hidden agendas are buying right now joining us with their answer is -- Russell Pearlman.
He's -- senior markets editor for Smart money Russell there's such a thing called a value trap when you go dig in for trashing you try and find these diamonds in the rough and they end up sucking on your energy -- motion your time.
-- -- -- -- Absolutely -- in some cases some of these names actually it's.
Funny you mentioned just think is Disney's actually one of the names that a lot of these value managers have been picking up during the fall because.
It's not of value trap where it's actually -- live very highly valued company -- premium associated with it's valuation.
But as it got down to near thirty dollars a share all these value managers -- been looking at Disney for years -- suddenly seen.
That -- one of their favorite stocks that they never got the five and rolled into the dumps there along with everybody else in in the fall we had a 17%.
Market pull back from may till September 1 of the worst summer pull -- we've had since World War II.
And it throughout stocks like Disney.
And as you see today it's it's back to 37 dollars and other names for appears some other names you look at some -- like community health which is a hospital system a lot of people worried about.
That they don't have as many admissions.
People are not staying as long as they they used to.
But you looked at a PE of five.
And a lot of folks are willing to take the chance to be able to go in another name out there is Cooper Tire & Rubber.
Some analysts were worried that they weren't selling as many replacement tires.
But the value -- we talked to said look.
The rest of the auto industry is picking up.
What they may lose on replacement tires that may gain back on new tires because there are artistry is is doing a lot better.
And then you look at some like Wells Fargo again banks are gonna know banks trade with European mess right now.
But wells Fargo's probably the least exposed of of these banks and also their their basic blocking tacking tackling of check king and and that businesses are gonna go away their franchises.
Is -- -- you know -- this is like a lot like bottom fishing right now and the thing is a lot of people watching this show would try to bottom fish all the time right notion of picking a bottom.
It was there are common thread amongst how these managers go about making -- decision because you know to your point.
The markets got hammered -- -- summer and there -- a lot of stocks they got hammered in this Bill Hemmer oh absolutely.
-- they haven't returned.
These managers are looking to buy something -- and hold that perhaps the next two or three years and so the -- -- may make the buying decision on one particular day but they're looking to hold it.
For -- next two or three years in fact one of the folks we talked to Wally -- Bought Wells Fargo essentially on one day -- this past August as like finally a chance to buy this stuff so -- -- almost all wanted all -- 23 years the one thing these all these stocks have in common is -- their companies with pretty predictable.
Businesses assault like tires -- be replaced anytime soon with some new product it's not like Disney World is gonna close up and people -- foreclose on it.
These are predictable businesses you're not worried that a new technology is gonna come in.
And for really long time that kind of had kind of consistent valuations on Wednesday.
Those companies go out of whack that's when these value managers are willing to jump in and take a chance that perhaps those valuations will get back to what they have -- -- -- You said these value investors were investing in these companies in the summer but the markets have done that considerable run up is certainly in October -- now we're up on the year -- so.
Can they still parent -- -- our investors and still jump.
And actually all these stocks are trading within -- to.
Of what the stocks and that we -- locked into the magazine so.
Really the only one that's moved significantly.
Is Disney and that was as of today show.
That's the values at least for these managers are are still there.
I think I guess -- I think those that they're gonna hold for three years in the viewers are realized that.
Yeah absolutely that's not gonna turn on of these stocks are just like their new technologies gonna not come in -- -- immediately they're stock valuations are not gonna change 2030% in today.
It will be over time and hold.
That aren't wrestle prominence -- thank you very much again -- -- today thank you.
Urging Israel -- -- closing up one dollar.
