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Gloom makes us glad.
That's a line from "Contrarian Investing," the 1998 book I co-authored with a New York money manager. And it means that against-the-crowd investors like me like to find stocks that have been beaten down from their highs.
Most investors don't think that way. They know of the mantra "Buy low and sell high" – but when it comes time to actually buy a beaten-down stock, emotion overcomes intellect, and they run to the sidelines. They "see" the move as too risky to make.
I'm here to tell you that they're wrong.
As my co-author and I found out in the process of writing our book, beaten-down stocks – as a group – are actually lower-risk/higher-upside investments than their high-flying alternatives.
And in the face of the coronavirus-pandemic market, low-risk investments are the ones you should be looking for.
That's what we're going to deliver today – in part.
- Is trading at a discount – down nearly a quarter from its peak.
- Has a hefty "margin of safety" – with a ton of cash and no debt.
- Has a big upside – the stock should easily double by 2025, a great return for a stock with lower downside risk.
Let's run through each of these, and you'll see why I'm so revved up about a stock that – on its face – seems so obvious.
About the Author
Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning at Money Map Press. With his latest project, Private Briefing, Bill takes you "behind the scenes" of his established investment news website for a closer look at the action. Members get all the expert analysis and exclusive scoops he can't publish... and some of the most valuable picks that turn up in Bill's closed-door sessions with editors and experts.