3Q carnage offering up casualty list possibilities

INVESTORS suffered their third unpleasant quarter in a row. After this pounding, quite a few stocks look attractive to me. I’ve highlighted a few of them on my “casualty list.” This list, which I compile each quarter, contains stocks that have been smacked down and that I believe will rise again.

Tyson Foods

Tyson Foods Inc. (TSN), the largest U.S. producer of chicken and beef and also a major producer of pork, dropped 23 percent in the latest quarter.

When times are tough, people may eat a little less meat and switch to cheaper cuts.

In the past decade, Tyson has usually sold for about 13 times earnings. Today that multiple is six.

Western Digital

Next, consider Western Digital Corp. (WDC), one of only two major manufacturers of hard disk drives. Western Digital stock fell 27 percent in the third quarter. Worse, it is down 13 percent over the past decade.

The gradual replacement of hard disk drives by solid state drives is the main reason. Western Digital is dominant in the former, but just one of many players in the latter.

Still, the company is hanging in there. It earned $4.74 per share in the past four quarters, its best showing since 2015.

The stock, which topped $100 in parts of 2015 and 2018, now sits at about $33. That is only seven times recent earnings and 0.55 times revenue.

Fulgent Genetics

A nearly debt-free choice is Fulgent Genetics Inc. (FLGT), based in Temple City, California. It was smacked for a 30 percent loss in the third quarter.

The company performs genetic tests for doctors and hospitals and has had a lucrative sideline doing Covid-19 tests. It went public in October 2016 at $9 a share and now trades for about $38.

The stock trades for a miserly three times earnings.

Great Lakes

Down a whopping 42 percent in the third quarter was Great Lakes Dredge & Dock Corp. (GLDD). This is a small company based (despite its name) in Houston, Texas. It helps maintain the navigability of ports and waterways and also does shoreline protection or restoration projects.

As a business, Great Lakes is no superstar. Neither growth nor profitability are outstanding. But the company has shown a profit in 13 of the past 15 years, and last year was the best of the 15.

What I like about the stock is how cheap it is, relative to its own history. For example, the shares go for 11 times earnings, whereas the average multiple in the past decade has been more than 23.

Intel

I saved Intel for last, simply because I’ve written about it a few times recently. I was optimistic and premature. The stock fell 30 percent in the third quarter.

Now this company, one of the largest semiconductor companies in the world, trades for less than six times earnings. That’s the lowest valuation in the past ten years, during which time the average price/earnings multiple was about 13.

Past record

My casualty list picks from a year ago did abominably. My worst pick was Land’s End Inc. (LE), which fell 67 percent. My other three picks — Paramount Global (PARA), Newmont Corp. (NEM) and Micron Technology Inc. (MU) — also underperformed the index.

The one-year total return was a loss of 41.4 percent, versus a loss of 15.3 percent for the S&P 500.