Here at StreetAuthority, we often talk about "
investing." Simply put, it's not enough to find stocks that are
inexpensive -- hundreds of stocks can bubble up on various value
screens. This often leads to the question "Why now?" After all,
will this stock still be inexpensive six months from now?
Instead, it's wise to focus on stocks with near-term drivers. This
can be a new product launch or an entry into a new
. Other times, it may be the imminent issuance of a first-time
or a key
. Whatever the catalyst, these stocks have upcoming events,
mandates or milestones that can get
finally moving up.
Let me give an example. If you follow my
$100,000 Real-Money Portfolio
(which is available free for a limited time), then you know I'm a
Calgon Carbon (NYSE:
, which I added to my portfolio
roughly two months ago
. This stock has been stuck in a trading range, but this should
change in coming quarters. New mandates that require ships to treat
their ballast water are expected to go into effect before the end
of the year. This should set the stage for rising sales in 2013 and
beyond. Analysts appear to under-appreciate this catalyst,
anticipating sales to grow less than 10% in 2013 (to about $650
million). This low bar spells opportunity.
Here are three other stocks with upcoming catalysts...
1. AMD (NYSE:
This chip maker has been steadily growing stronger under new
management as new high-performance low-cost chips are helping
. Just a few days ago, AMD launched a new microprocessor
called Trinity, which is targeted to the burgeoning niche of
"ultra-books." These are sleek, lightweight high-end laptops that
represent the first solid chance to push back against the tablet
These ultra-books will often carry Intel's chip, but their
$1,000-plus price may scare off some buyers. AMD's low-priced
Trinity chip could be a compelling alternative for ultra-book
makers, as they'd be able to charge as low as $600 for the
ultra-books. Acer, Asus, Lenovo, Samsung,
, Toshiba and
Hewlett Packard (NYSE:
have all announced plans to use Trinity. Expect to hear a lot about
this important product launch when AMD releases second-quarter
results this summer.
2. Jabil Circuit (NYSE:
This contract manufacturer serves as the factory to many other tech
companies. I first wrote about Jabil
in late 2010
, when an impressive growth strategy was laid out for investors.
Shares moved up sharply, but have since been hit by concerns that
Cisco Systems (Nasdaq:
Research in Motion (Nasdaq:
-- both key customers -- will send less business to Jabil. Those
concerns are now priced in, and it's time to revisit this stock,
especially now that a positive catalyst is in place.
The catalyst: the next iPhone, which is slated for release in
September. In each of the four periods when the previous iPhones
were launched, Jabil's stock typically made a nice quick upward
move. (Jabil doesn't make the actual phone, but a number of
subcomponents that go into it.)
Here's what happened in each of the past two years. The iPhone 4
was launched in June 2011, and two months later, this stock was up
15% (compared with a 5% gain for the S&P 500 in the same
period). The iPhone 4S was launched in October 2011, which fueled a
36% gain in this stock during the next five months -- more than
twice the gain seen in the S&P 500.
With an eye toward that trading pattern, Merrill Lynch has recently
upgraded its rating on Jabil to "buy" with a $28
(roughly 40% above current levels).
3. Take Two Interactive (Nasdaq:
Shares of this video game maker have slumped badly in recent weeks
as an expected catalyst disappeared. Investors were disappointed to
learn that "Bioshock Infinite," the next title in the popular
"Bioshock" series of games, would see its release delayed from late
2012 to early 2013 so the company could tweak a few story lines.
Well, 2013 also happens to be the year when Take Two's
highly-popular "Grand Theft Auto" game will see a new release.
These two games alone could help Take Two deliver a knockout year.
Although Take Two likely lost roughly $0.65 a share in the
ended March (results haven't been released yet), analysts
anticipate the current year to be far different. Thanks to these
two games, sales are expected to more than double in fiscal (March)
2013 to about $1.8 billion.
per share may approach $3 according to some forecasts. The recent
move back below $13 sets the stage for a very low-multiple stock,
with clear catalysts in place for upside.
Risks to Consider:
As Take Two shows, catalysts can be hit by delays. Indeed, I'm
on Calgon Carbon's catalyst-induced prospects, but am also prepared
for speed bumps along the way to full ballast water treatment
Action to Take -->
Of all of these, AMD appears to be the most timely investment
opportunity, followed by Jabil Circuit, Calgon Carbon and Take Two.
All four of these stocks are trading on near-term results, and
investors are seemingly ignoring the good news to come. This is a
great chance to snatch up shares before the crowd catches on.
Be sure not to miss a single thing and have
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-- David Sterman
David Sterman does not personally hold positions in any
securities mentioned in this article. StreetAuthority LLC owns
shares of CSCO, INTC in one or more if its "real money"