Quick - what do Simon Property Group Inc. (NYSE:SPG), Dr. Pepper Snapple Group Inc. (NYSE:DPS), and Silicon Image, Inc. (NASDAQ:SIMG) have in common? If you said absolutely nothing, you'd be about 99% right. There's one common thing between SIMG, SPG, and DPS right now, however. What's that? All three stocks are on my personal "buy" list this week.
Every single week, I run a proprietary sort-and-scan of stocks that meet a strict set of fundamental as well as technical criteria. The goal is to find investing ideas that I wouldn't have otherwise found. Otherwise, it's too easy to fall into the trap of buying popular and well-covered (by the media) stocks rather than digging up my own undiscovered value... where the real opportunities are for investors. Truth be told, most of them end up being worthless. Enough of them look attractive enough, however, to explore as trade candidates. As you may have guessed, Silicon Image, Dr. Pepper Snapple Group, and Simon Property Group were the creme of the crop this week.
Truth be told, while I can appreciate the long-term momentum Dr. Pepper Snapple Group shares have been enjoying since 2010, I feel like DPS shares are a little - ok, a lot - overbought. The stock's quietly hitting all-time highs today, which generally isn't my favorite place to step into any name. On the other hand...
... it can't be denied that the company has done its part on the earnings front to justify record high levels for DPS shares. Dr. Pepper Snapple Group just posted its best quarterly earnings ever ($1.01), and the trailing P/E of 16.01 isn't out of line. It's just a little frothy for this kind of stock. All the same, I'd be willing to wade in.
If the name Silicon Image rings a bell, it might be because the SmallCap Network daily newsletter picked it as one if its hypothetical holdings a few days ago. I can see why they liked it. After a pretty significant pullback in 2011 and 2012, SIMG has been making higher lows, and doing its best to make higher highs. Though erratic, the long-term uptrend since mid-2012 is healthy enough to take a shot on here.
But what about the choppy earnings? SIMG seems like it's posted as many quarterly losses as it has gains since 2008. While the past has been hit and miss, 2014 is expected to be a breakout year for Silicon Image. The forward-looking P/E of 13.1 is based on expected earnings growth of 9% this year and growth of 11.2% next year. It's not a ton of growth, but the company's on pace to swing to a trailing-twelve-month profit sometime in the first half of 2014, and the market could go nuts if and when that happens. In fact, the chart says the market is already starting to whisper.
Last but not least, Simon Property Group may not be a bargain at a trailing P/E of 37.5, but it is making progress on the income front. In fact, as the EPS line on the chart below clearly shows, SPG is making very rapid progress in terms of income.
The reason SPG is such a compelling buy right now is the tumble the stock took in the middle of last year. That dip simply lowered the price, and if you look closely at the chart of Simon Property Group, you'll see it's finally shrugged off that weakness and is all the way back in a bulls track. For perspective, though it's not shown on the chart, shares crossed above their 200-day moving average line this week.
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