Top 5 Cheap Stocks To Invest In 2018

My short thesis on Vera Bradley (VRA) is pretty simple. First, Vera Bradley’s business is declining:

Source: Author from VRA filings and press releases; EBITDA calculations mine, exclude one-time factors. FY18 numbers at midpoint of company guidance.

Second, I don’t think Vera Bradley’s management has any real answer to reverse those declines – and the continuing freefall in mall traffic could easily offset any assortment/marketing improvements, anyhow. And third, Vera Bradley still isn’t appropriately priced as a declining business. Multiples of 15x the midpoint of FY18 EPS guidance plus cash, and 5.3x EV/EBITDA might sound cheap. But they’re actually above most retail peers (particularly mall retailers), and both assume that earnings and/or cash flow stabilize in the not-too-distant future, and begin to grow again at some point.

Top 5 Cheap Stocks To Invest In 2018: USG Corporation(USG)

Advisors’ Opinion:

  • [By Jon C. Ogg]

    USG Corp. (NYSE: USG) was reiterated as Hold but the price target was raised to $35 from $29 (versus a $34.23 close) at Jefferies.

    Thursday’s top analyst upgrades and downgradesincluded Biogen, Goldcorp, GoPro, Oracle, Sirius XM, Tyson Foods, Ciena and many more.

  • [By The Ticker Tape]

    Homebuilders like Lennar, PulteGroup, Inc. (NYSE: PHM), and D.R. Horton, Inc. (NYSE: DHI) could benefit from a strengthening housing recovery. If you’re bullish on housing, you might want to take a step back and think about other companies in that space. Home improvement stores like Home Depot Inc (NYSE: HD) and Lowe's Companies, Inc. (NYSE: LOW) could get a boost as well as companies that supply products for new homes like Whirlpool Corporation (NYSE: WHR) and USG Corporation(NYSE: USG).

Top 5 Cheap Stocks To Invest In 2018: Kohl’s Corporation(KSS)

Advisors’ Opinion:

  • [By Ben Levisohn]

    Kohl’s (KSS) tumbled to the bottom of the S&P 500 today after offering earnings guidance that was well below analyst forecasts.

    Getty Images

    Kohl’sdropped 19% to $42.01 today, while the S&P 500 dipped 0.1% to 2,269.00.

    RBC’s Brian Tunick and Bilun Boyner worry that the bear case gas been revived:

    Kohl’s reported Holiday comps of -2%, below our model for -0.5%, as sales remained volatile through the quarter. Similar to early commentary by peers, stronger sales for Black Friday and the week before Christmas were offset by softness in early November and December. In line with Q3, the strongest categories were men’s, home, and footwear while accessories was most challenging.

    In addition to the sales downside,Kohl’s lowered its EPS guidance to $3.603.65 (from $3.804.00) to reflect lower than expected gross margins (we estimate were down 5060bps versus our prior model for up 40bp), which was mainly due to mix, timing of sales, and promotional environment as the company worked to exit the year with clean inventory positions (planning to end the year with inventories down mid-to-high SD)…

    AlthoughKohl’s still has a reasonable 1H’17 opportunity with easy gross margin compares, Under Armour (UA) launch, and potential for a new CFO, we believe disappointing Holiday sales and the guidance cut removed most of the market’s excitement around a return to momentum, reviving the secular bear case around department stores and Kohl’s. Maintaining Underperform and lowering price target to $42.

    Kohl’s market capitalization fell to $7.7 billion today from $9.2 billion yesterday. It reported net income of $673 million on sales of $19 billion in 2016.

  • [By Kumar Abhishek]

    But the changing consumer behavior has hit the brick and mortar chains hard. In a press release, Macy’s (NYSE:M) announced that it would be closing 68 stores and laying off more than 10000 people after the company reported a dismal quarter. The same store sales declined by 2.1%. It is not Macy’s alone, other departmental stores are facing similar challenges. The holiday season report led to ablood bath in retail stocks yesterday. Macy’s was down 13%, JCP (NYSE:JCP) down 7.2% and Kohl’s (NYSE:KSS) was down 19%. Those are pretty scary numbers. On the other hand, Amazon stock gained more than 3% yesterday.

  • [By Ben Levisohn]

    Under Armour’s (UAA) guidance last month was so bad that the stock lost a quarter of its value in just one day. Some analysts have stuck with the company, but many more have downgraded it. But that’s in the past. Now, Under Armour’s products are hitting the shelves at Kohl’s (KSS), and some have worried that it could dilute Under Armour’s brand. Kohl’s, meanwhile, has had troubles of its own–its stock is down 23% during the past three months–as investors have worried about the internet destroying retail as we know it. Which begs the question: Are you in trouble when you’re looking at Kohl’s as a savior?

  • [By Douglas A. McIntyre]

    Retailer shares have been unable to fully stabilize after sell-offs that accompanied their earnings for the 2016 holiday period. Some retailers shuttered stores. Others gave pessimistic guidance. The slide began in earnest again, as retail stocks got punished on Monday. Kohl’s Corp. (NYSE: KSS), Macy’s Inc. (NYSE: M), Gap Inc. (NYSE: GPS) and Nordstrom Inc. (NYSE: JWM) were among the largest losers in the S&P 500.

  • [By Shanthi Rexaline]

    Here are the number of stores at the end of the third quarter of 2016 compared to the number of stores in 2007:

    J C Penney Company Inc (NYSE: JCP): 1,014 vs. 1,067. Kohl’s Corporation (NYSE: KSS): 1,155 vs. 929. Macy’s Inc (NYSE: M): 880 vs. 853. Nordstrom, Inc. (NYSE: JWN): 348 vs. 157. TJX Companies Inc (NYSE: TJX): 582 vs. 2,500. Wal-Mart Stores Inc (NYSE: WMT)*: 4,574 vs. 4,141.

    Source: SEC Filings

Top 5 Cheap Stocks To Invest In 2018: International Business Machines Corporation(IBM)

Advisors’ Opinion:

  • [By Keith Speights]

    Illumina was busy during the fourth quarter. Key developments over the past three months included:

    The commercial launch of the NovaSeq system, a new high-throughput sequencing system that the company hopes can dramatically lower genomic sequencing costs. The launch of the Bio-Rad single-cell sequencing solution. The launch of the TruSight Tumor 170, a 170-gene next-generation sequencing solution designed to provide a better picture of a tumor’s genomic landscape. The announcement of a deal with Philips (NYSE:PHG) to integrate Illumina’s sequencing systems with Philips’ IntelliSpace Genomics clinical informatics platform. A partnership withIBM (NYSE:IBM) to integrate IBM’s artificial intelligence system Watson for Genomics into Illumina’s BaseSpace sequence hub and tumor sequencing process.

    What management had to say

    Illumina’s CEO, Frank de Souza, was more cheerful than he was in the third quarter. “We ended 2016 on a stronger note than we anticipated, with robust performance across sequencing consumables and microarrays,” he said, adding, “We also made significant progress on key R&D programs as evidenced by the launch of NovaSeq, a brand new architecture that delivers the most powerful, flexible sequencer ever created, once again redefining the trajectory of sequencing.”

  • [By Tim Green]

    It’s easy to be pessimistic when it comes to International Business Machines. The company has suffered from 14 consecutive quarterly revenue declines, earnings are expected to slump in 2015, and the stock has declined by more than 10% in each of the past two years.

    But a combination of factors makes IBM one of my top stocks going into the 2016.

    The stock is cheap, trading at less than 10 times the low end of the company’s earnings guidance for 2015. This would be meaningless if IBM’s earnings continue to fall, but one of the biggest issues for the company in 2015 was a strengthening U.S. dollar. IBM is a global company, and its revenue and profits have slumped as foreign currency translated into fewer U.S dollars over the course of the year. On an adjusted basis, IBM’s revenue was flattish in 2015, not exactly the disaster that the headline numbers suggest.

  • [By Arie Goren]

    After reporting much better than expected results for its third quarter fiscal 2017 ended October 30,NVIDIA (NSDQ:NVDA)has continued to build new markets signing new collaborations with the tech giantsMicrosoft (NSDQ:MSFT)and International Business Machines (NYSE:IBM). In my view, these new developments will enable NVIDIA to maintain its impressive growth and to drive its shares even higher.

  • [By Paul Ausick]

    This is GE’s 20th consecutive week as the Dow’s worst performer. The company still has a big lead over the second worst stock, Exxon Mobil Corp. (NYSE: XOM), now down about 7.5%, and third-worst International Business Machines Corp. (NYSE: IBM), down about 3.2% for the year. Only five of the 30 Dow stocks have traded down so far this year.

  • [By A.J. Bursick]

    Here are just a few of the big-headline IP theft cases from 2015 – the year they hit an all-time high…

    On May 7, 2015, Xiawen Huang, a dual U.S.-China citizen, was arrested in North Carolina for stealing IP from two energy firms for which he once worked and later setting up a competing company in China using Chinese government funds and the stolen IP. He pled guilty in October of that year and was sentenced to 10 years in prison. On May 19, 2015, former U.S. President Barack Obama’s administration announced the arrest of a Chinese professor and the indictment of five other Chinese citizens in what turned out to be a decade-long scheme to steal microelectronics designs from American companies on behalf of the Chinese government. The men’s cases are still pending, but they remain under house arrest. On Dec. 7, 2015, the FBI arrested a former software engineer for International Business Machines Corp. (NYSE: IBM) in China for allegedly stealing proprietary source code from his one-time employer in the United States on behalf of Beijing’s government, according to Reuters on Dec. 8, 2015. He plead guilty in May of this year, with an added charge of “economic espionage,” and is due to be sentenced by U.S. District Judge Kenneth Karas in White Plains, NY, tomorrow (Oct. 13, 2017).

    These few cases, and the hundreds of them since (Bloomberg reported today that the FBI can’t release exact figures insofar as case amount, only that they’re indeed “in the hundreds”), gives Lighthizer plenty to work with in regards to President Trump’s executive order probe.

  • [By Paul Ausick]

    International Business Machines Corp. (NYSE: IBM) traded up 1.36% at $178.25. The stock’s 52-week range is $116.90 to $179.25. Volume was about 20% below the daily average of around 3.8 million shares. The company had no specific news.

Top 5 Cheap Stocks To Invest In 2018: Express-1 Expedited Solutions Inc.(XPO)

Advisors’ Opinion:


    In the Lightning Round, Cramer was bullish on GlaxoSmithKline (GSK) , Chubb (CB) , XPO Logistics (XPO) , FedEx (FDX) and Nordson (NDSN) .

    Cramer was bearish on Prudential (PRU) , Advanced Semiconductor Engineering (ASX) and ZTO Express (ZTO) .


    With a trailing 12-month price-to-earnings ratio of 28.79, FedEx’s valuation is in line with UPS (27.52) and far cheaper than XPO Logistics (XPO) (90.25).

Top 5 Cheap Stocks To Invest In 2018: Emerson Electric Company(EMR)

Advisors’ Opinion:

  • [By Ben Levisohn]

    Industrial companies like Dover (DOV), Emerson Electric (EMR), Eaton (ETN), 3M (MMM) and Rockwell Automation (ROK) are calling for earnings growth to get better during the second half of the year. Bernstein’s Steven Winoker and team aren’t feeling as confident:

  • [By Ben Levisohn]

    Bernstein’s Steven Winoker and team contend that Brexit is “bad for all our companies it is just a matter of degree.” They explain why Tyco International (TYC), Idex (IEX), Danaher (DHR),Honeywell International (HON) and Emerson Electric (EMR) could feel some degree of pain:

  • [By Ben Levisohn]

    Shares of General Electric have dropped 3.8% so far this year, with everything from its accounting to weaker margins being blamed for its weakness. Barclays’ Scott Davis and team, however, spoke with a source they call the “smartest man in the room,” who just so happens to be “nibbling” on General Electric now. They explain why and offer his views on Honeywell International (HON), Emerson Electric (EMR), and ITT (ITT) as well:

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