Should You Buy VW Shares? 10 Battered Stocks Worth Considering


The news that Volkswagen may have improperly manipulated its cars to pass U.S. emissions inspections has been a public relations nightmare for the company, and it's already impacted its stock, which was down about 30% at one point. No doubt, some Volkswagen investors will be selling, if they haven't already. But a contrarian investor might say it's time to jump in while share values are low.

My sense is that it's too soon to buy Volkswagen shares, as we don't know how the whole controversy will play out. But there are other companies that have been beaten down by investors, and perhaps now offer a good value.

Here are 10 battered stocks that may be worthwhile for investors comfortable with a little bit of risk.

1. Twitter

We know there are a lot of questions about the business model and growth potential at this social media company. No doubt, Twitter executives have some things to figure out. But many of the skeptical comments about Twitter resemble those made about Facebook just a couple years ago, and look at Facebook shares now. Twitter has more than 300 million active users, so there's a lot of potential there. And shares are trading at below the company's IPO price.

2. Halliburton

Like many companies tied to the energy industry, Halliburton has taken a beating with the tumble in oil prices. Shares of the company are down 45% in the last 12 months. But there are many observers who say Halliburton is well-poised to quickly take advantage of any recovery, because of its activities involving shale. It may take a while, but there's a good chance Halliburton will rebound, and shares of this big company have rarely been available for so little.

3. IBM

Down 23% in the last 52 weeks, and about 11% in 2015, IBM definitely falls into the battered category. But this is still one of the largest companies on Earth, and is hugely profitable, with net income of $3.4 billion in the most recent quarter. Warren Buffett bought more IBM stock earlier this year, so why shouldn't you?

4. General Motors

The U.S. automaker has had a bad year, with shares down more than 10% in 2015. But sales of GM vehicles were up 12% in September, and analysts have set high share price targets for the year. With fuel prices still low, people may be willing to buy larger, higher-margin vehicles, and the bad news surrounding competitor Volkswagen doesn't hurt, either.

5. American Airlines

For much of the year, shares of the world's second-largest airline have struggled to get off the runway. In fact, they are down nearly 30% on the year. The company's revenues have declined a bit, but American still managed $1.7 billion in net income during the second quarter, more than double that of the same quarter a year ago. Low fuel prices should help American Airlines in the short term.

6. Wynn Resorts

The gamblers at Wynn casinos probably made out better than the company's investors in the last year. Shares are down more than 66% in the last 52 weeks, largely due to lackluster returns from its operations on the Chinese island of Macau. There's no question Wynn has some challenges, but there's also reason to believe all of these issues are now baked into the stock price. Many analysts are predicting a rebound in price in the coming months, and that the company will be fine, long-term. Shares of Wynn, at less than one-third the price of a year ago, may be a good value at the moment.

7. Las Vegas Sands

It's not that we love casino stocks, it's just that here's another company in that industry that may be done taking a beating from Wall Street. Yes, shares are down 38% off the 52-week high. But this owner of the Venetian and Palazzo casinos still operates with a very strong net profit margin of 22.75%, so there's a lot of health there. Some analysts say now's the time to buy while the price is low.

8. Viacom

Shares of this media company are off about 44% in the last 52 weeks, as traditional broadcasters and cable companies have fought against Netflix and other competitors. But there's evidence to show that the stock bottomed out about a month ago, and some analysts have said it's due for a pop. Net income from the most recent quarter was $591 million, which was only down slightly from the same quarter a year ago. The long-term prospects for media stocks are uncertain, but you probably won't get burned in the short term if you buy Viacom shares now.

9. LendingClub

This young company went public in December of last year and has had a tough go of it. Shares of LendingClub, which serves as an online marketplace between buyers and sellers, are now trading about $10 below the IPO price of $23. But the company continues to bring in new loans, and will benefit from an expected Fed rate hike. As young tech stocks go, this is not a bad one if you can be patient.

10. Micron Technology

The semiconductor space was one of the most hammered industries during the recent market downturn, and Micron felt the pain as one of the biggest players. Shares are down a whopping 54% this year. But prices began to creep back up at the end of September. Revenues for the company are not far off from where they were a year ago, and an 18% net profit margin is one of the best in the industry. Expect Micron shares to rebound when the market does.

Have you ever taken a chance on a battered stock? How'd you do?

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