It is a common trait amongst many investors and analysts to sell a stock immediately when the going gets rough (or better yet, when it looks like things could get rough). They tend to focus on any short-term implications that may affect profits or operations and ignore the amazing long-term prospects that a stock may possess.
And that's where we Fools (capital 'F') come in…
Foolish investors know that one of the best times to buy a stock is when it has lost favour with the broader market. It allows us to pick up quality companies trading at bargain prices that we can let climb in value over the long term.
Even with the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) hovering just 2% shy of its multi-year peak of 5,554.5 points, there are still plenty of stocks that the market is choosing to shun to the side. Here are three opportunities that are worthy of your interest.
- Coca-Cola Amatil Ltd (ASX: CCL) is definitely worthy of a place on this list. Since hitting an all-time high of $15.40 in March last year, the stock has dropped nearly 41% to be trading at just $9.13. While its profits have been impacted by a strong Aussie dollar, a pricing war with rival Schweppes and rising costs, the issues appear to only be short-term in nature. While we cannot simply ignore the headwinds facing the company, we can have faith that the strength of the brand and management team will guide the business to new heights in the long run.
- Discount electronics retailer JB Hi-Fi Limited (ASX: JBH) has taken a dive recently thanks to the impact that the Coalition Government's horror budget has had on consumer confidence. After rallying strongly last year, the shares have lost 16% so far in 2014. However, JB offers significant growth potential as it rolls out its new 'Home' format stores, while a lower Aussie dollar should also help it fend off online competition. In addition, the stock offers a juicy 4.2% fully franked dividend!
- Mining giant BHP Billiton Limited (ASX: BHP) is another stock to add to your watchlist (if it's not on there already). With iron ore and coal both tumbling in price, investors have understandably been concerned about the company's earnings. However, BHP Billiton is drastically reducing costs and improving productivity, and while things could remain volatile in the short term, the long term is looking promising. I think the stock could fall further from today's price of $36.51, so investors may want to remain patient with this one.
Each of the companies mentioned above could deliver some serious gains in the coming years, but we believe there are even greater opportunities….
