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| The Basics | 10 Comeback Kid stocks for 2006
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Finally, in this category, I ruled out stocks trading for less than $5 per share. Stocks trading below that level probably have serious problems that many investors deem fatal.
A total of 280 members of the S&P 500 passed these tests when I used MSN Money's Stock Screener.
Screening Parameter: S&P Index Membership = S&P 500
Screening Parameter: Market Capitalization >=$10 billion (ENTERED AS 10,000,000,000)
Screening Parameter: Last Price >= 5
Down and out
Finding out-of-favor stocks isnt complicated. The stocks that have dropped the furthest are the most out of favor.
I found them by first screening for stocks that have produced negative returns over the past 52 weeks.
Screening Parameter: 52-week price change percentage: <= 0
My screen listed 74 stocks. The final step is to sort the list based on the 52-week return. Do that by clicking on the 52-week price-change column header. You may have to click it a second time to list the worst performers at the top. The 10 worst performers are my Comeback candidates for 2006, as listed in this chart:
| Comeback candidates for 2006 | | Company/Symbol | Recent price* | Industry | 52-week price change | | Symantec (SYMC, news, msgs) | 17.99 | Software | -46.0% | | Ford Motor (F, news, msgs) | 8.53 | Auto Mfg. | -41.6% | | General Motors (GM, news, msgs) | 23.00 | Auto Mfg. | -39.8% | | Fannie Mae (FNM, news, msgs) | 49.43 | Credit Services | -31.4% | | Avon Products (AVP, news, msgs) | 27.49 | Personal Products | -30.1% | | Biogen Idec (BIIB, news, msgs) | 43.03 | Biotech | -29.5% | | Dell (DELL, news, msgs) | 30.42 | Personal Computers | -27.4% | | Zimmer Holdings (ZMH, news, msgs) | 62.50 | Medical Appliances & Equip. | -25.2% | | Gannett (GCI, news, msgs) | 61.49 | Newspaper Publishers | -25.0% | | Boston Scientific (BSX, news, msgs) | 26.45 | Medical Equipment | -23.7% |
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*As of Nov. 11, 2005
These comeback stocks had a bad year in 2005 for a variety of reasons. Security software maker Symantec (SYMC, news, msgs) fell on concerns that it made an unwise acquisition. Ford Motor (F, news, msgs) and General Motors (GM, news, msgs) are down because investors think pension and health benefit costs will keep them from being able to compete with imports. An ongoing accounting scandal dropped Fannie Mae's (FNM, news, msgs) shares. Cosmetics-maker Avon Products (AVP, news, msgs) and personal-computer-maker Dell (DELL, news, msgs) both dropped after they reduced sales and earnings forecasts. Drug-maker Biogen Idec's (BIIB, news, msgs) share price took a big hit when the biotech firm withdrew a major drug from the market in the face of safety concerns.
Zimmer Holdings (ZMH, news, msgs), which makes reconstructive orthopedic implants, saw its share price fall on concerns of increasing price competition in its industry. Newspaper publisher Gannett (GCI, news, msgs) suffered because of dim prospects for the newspaper industry. Finally, Boston Scientific (BSX, news, msgs) problems with a major product line sunk its share price.
OHiggins advised buying equal dollar amounts of each stock and holding them for one-year. Apply the same strategy to the comeback stocks. Avoid the temptation to cherry-pick the list. The only thing predictable about the stock market is surprise. Theres no way to predict which stocks will do best.
At the time of publication, Harry Domash did not own or control positions in any of the stocks mentioned in this article.
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