Are you starting to think of what to buy for Christmas presents already? If you are, then you may as well pick up some discounted stocks while you're at it, too.
Here are two stocks that have been oversold in my opinion and are showing good value.
— JB Hi-Fi Limited (ASX: JBH), the electronics specialty retailer, has been slowly declining in price since late last year. The boost it was seeing in its home appliances and white goods sales thanks to the rising housing market wasn't enough to offset weak tablet PC and iPad sales earlier this year.
Despite that, the retailer surprised the market by raising full year net profits by 10.3%. Still, the market kept on being negative, wondering if the expected new Apple products out in late 2014 would turn things around. Also, retail trade didn't seem to be getting any better, so JB Hi-Fi drifted lower and lower.
At the end of October, suddenly investors took notice when the company said it still expects to hit its sales target of $3.6 billion for FY 2015. What else will it have going for it?
– More JB Hi-Fi HOME format stores will be opened. They were one of the key drivers of that surprise 10.3% profit increase as white goods were starting to make a big difference.
– New Apple iPads and the latest Microsoft Surface tablet PCs would be in the store for Christmas.
– Increases in X-Box and Playstation game console inventory, ready for holiday shopping.
Things may be shaping up for a merrier Christmas. It's priced at 12 times earnings, at the lower end of its past PE averages. Investors can help themselves to the 5.4% fully franked dividend yield if they pick up the retailer now.
— Flight Centre Travel Group Ltd (ASX: FLT) is another stock coming off of recent lows. Like JB Hi-Fi, its share price has been trailing down from about $55 in April to as low as $40 in mid-October.
The company didn't change its FY 2015 guidance for underlying profit before tax to be around $395 – $405 million and all of the countries it operates in were showing a profit, so the outlook is solid.
The reason the stock is up from $40 may be that at 15 times earnings, it's a bargain. With consensus forecast earnings growth around 9% annually for the next two years plus a 3.9% dividend yield fully franked, the stock is showing good value for money. I like this international franchise for its great growth potential.
