Neff from CNN Money :
In the meantime he expects his down-and-out stocks to benefit from the rebound. First on his list is Seagate Technology (STX), a top hard-disk-drive manufacturer that supplies Dell, Hewlett-Packard and others. It's been a rough ride: Neff thought the stock was cheap at around $20 last January, then watched the shares slide nearly 80% through 2008. He added to his position at $4 in the fall, when the yield had crept up to 12%.
In early December the company lowered its earnings estimates for the current quarter. But Neff thinks revenues will recover in the next fiscal year, which for Seagate begins in June. "It's going to have a pretty testy quarter, but I don't think the dividend is in question, and that provides some support," he says. "It's not going to be a normal year, but I still think next year's EPS could be a buck or better."
He's also bullish on another technology stalwart, Hewlett-Packard (HPQ, Fortune 500). "I wouldn't usually own two technology stocks, but at the right price even I can be convinced," he says. And he couldn't pass up HP, a blue chip that now trades in the mid-30s.
"I think for this challenging year, HP will earn $4 a share," he says. "They're leading the pack on PCs, and I think they'll get some economies from the EDS acquisition. If I'm right on $4 for 2009, next year it will be $4.60. That's friendly growth."
“I think retail investors should be availing themselves of the bargains out there.”
He's also looking for growth in energy stocks, since he expects oil prices to rebound from late-2008 lows. "Obviously the price of oil came down sharply, but even at this level refiners and producers are making pretty good money," he says. "If I'm right and oil's coming back up a bit, they'll continue to have good bottom lines."
Neff did get pummeled on one of his energy picks last year: He started buying ConocoPhillips (COP, Fortune 500) when the stock first dipped last January. "I thought I was getting quite a bargain at $70 a share," he says. But after climbing to $96 in July, the stock started sliding. It ended the year in the low 50s - a steal, in Neff's opinion.
"They have great cash flow, and they'll raise the dividend in a couple of months," says Neff. "I think they'll have $12 in earnings per share for 2008, maybe $11.50. So at a little over $50 a share, I think that's a very low multiple."
His other favorite is Swift Energy (SFY), which operates oil and natural gas wells in Louisiana and Texas. In 2008 Swift's shares dropped more than 50%. Even so, it has a high P/E because analysts expect earnings to fall sharply this year. But Neff, in true contrarian style, thinks those estimates are too pessimistic. "It's cheap, it's profitable, and it could be a purchase candidate," he says.
In the meantime he expects his down-and-out stocks to benefit from the rebound. First on his list is Seagate Technology (STX), a top hard-disk-drive manufacturer that supplies Dell, Hewlett-Packard and others. It's been a rough ride: Neff thought the stock was cheap at around $20 last January, then watched the shares slide nearly 80% through 2008. He added to his position at $4 in the fall, when the yield had crept up to 12%.
In early December the company lowered its earnings estimates for the current quarter. But Neff thinks revenues will recover in the next fiscal year, which for Seagate begins in June. "It's going to have a pretty testy quarter, but I don't think the dividend is in question, and that provides some support," he says. "It's not going to be a normal year, but I still think next year's EPS could be a buck or better."
He's also bullish on another technology stalwart, Hewlett-Packard (HPQ, Fortune 500). "I wouldn't usually own two technology stocks, but at the right price even I can be convinced," he says. And he couldn't pass up HP, a blue chip that now trades in the mid-30s.
"I think for this challenging year, HP will earn $4 a share," he says. "They're leading the pack on PCs, and I think they'll get some economies from the EDS acquisition. If I'm right on $4 for 2009, next year it will be $4.60. That's friendly growth."
“I think retail investors should be availing themselves of the bargains out there.”
He's also looking for growth in energy stocks, since he expects oil prices to rebound from late-2008 lows. "Obviously the price of oil came down sharply, but even at this level refiners and producers are making pretty good money," he says. "If I'm right and oil's coming back up a bit, they'll continue to have good bottom lines."
Neff did get pummeled on one of his energy picks last year: He started buying ConocoPhillips (COP, Fortune 500) when the stock first dipped last January. "I thought I was getting quite a bargain at $70 a share," he says. But after climbing to $96 in July, the stock started sliding. It ended the year in the low 50s - a steal, in Neff's opinion.
"They have great cash flow, and they'll raise the dividend in a couple of months," says Neff. "I think they'll have $12 in earnings per share for 2008, maybe $11.50. So at a little over $50 a share, I think that's a very low multiple."
His other favorite is Swift Energy (SFY), which operates oil and natural gas wells in Louisiana and Texas. In 2008 Swift's shares dropped more than 50%. Even so, it has a high P/E because analysts expect earnings to fall sharply this year. But Neff, in true contrarian style, thinks those estimates are too pessimistic. "It's cheap, it's profitable, and it could be a purchase candidate," he says.
