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BottomFish posts

Newell Rubbermaid (NWL) shows signs of life

Posted Sep 13th 2007 11:50AM by Eric Buscemi (RSS feed)
Filed under: Newell Rubbermaid (NWL), Bargain Stocks

Mark Ketchum, the CEO and President of Newell Rubbermaid Inc (NYSE: NWL), bought 20,000 shares of his company's stock late last month, according to a SEC filing. Newell, which has been showing signs of beginning a sustainable turnaround, got hit hard in the recent stock market correction, with shares dropping from $30 to around $25, a 17% decline.

Investors are concerned that recent revenue growth is unsustainable and will weaken as the economy slows. However, in a report released this morning by Bank of America (NYSE: BAC), management believes the growth initiatives that have been put in place are taking hold and 3% to 5% revenue growth is doable despite the slowing macro environment. However, B of A is somewhat skeptical and maintained its Neutral rating and $28 price target.

Merrill Lynch & Co. (NYSE: MER), in a report released yesterday, wrote that investors should jump on board Newell's stock, as the correction has been overdone. Newell should earn $1.78 this year, jumping to $2.00 next year, implying price-to-earnings ratios of 14x and 12.7x for 2007 and 2008, respectively. This is cheap for a company owning such well-known franchise names as Rubbermaid, Sharpie, plus a whole host of others. Merrill has a $34 price target on Newell Rubbermaid.

Continue reading Newell Rubbermaid (NWL) shows signs of life

Time to bottom fish AES?

Posted Jul 27th 2007 11:30AM by Eric Buscemi (RSS feed)
Filed under: Bargain Stocks

AES Corporation (NYSE: AES), the emerging-market power generation company, has had a tough few months, declining from $24 to $20.50 -- a big decline for a company with steady and large cash flow generation.

The stock's weakness began when its multi-year earnings guidance was a little lower than expected. Another reason for investor nervousness is that in the last liquidity crisis, from 2000 thru 2002, the stock got crushed as the company suffered from a seriously leveraged balance sheet with concerns about bankruptcy being high.

However, this time around, the company has considerably less debt and generates considerably more cash flow. Also, emerging markets around the world have an even greater understanding that they must place an emphasis on power generation if they want their economies to improve.

Having dropped 15% during the past month, it may be time to consider bottom fishing in AES. The stock has been trading nicely between $20 and $24.