Compiled from StockScouter ratings by Verus Analytics
Despite an 11 percent increase in both revenue and profits in its most recent quarterly earnings, shares of data storage company EMC (EMC) are down about 7 percent from their mid-January highs after the company lowered its forward guidance and announced a round of job cuts.
That dip makes the stock an appealing bargain, says Karen Riccio of Traders Reserve.
"If a sell-off comes as a result of a collapsing industry, economic downturn, or a profits-altering event specific to a company, a downturn in share price should raise a red flag," Riccio says. "But I don't see that today, especially in the technology sector, where so many companies offer value, growth, stability and products and services that have become necessities in today's consumer and IT worlds."
EMC also appears on StockScouter's latest list of 10 top stocks to watch right now.
While EMC's core business is digital storage, the Hopkinton, Mass.-based company has also made some key acquisitions -- including VMWare, RSA Security and Ingenico -- in the past 10 years. The latter two should benefit as U.S. retailers try to make customer transactions more secure in the wake of high-profile hacking incidents, including the major data breach that cast a shadow over Target's (TGT) holiday shopping season.
EMC gets a '10' from the StockScouter rating system on MSN Money, the highest score possible. Based on StockScouter's analysis, shares of EMC are expected to significantly outperform the market over the next six months with less than average risk.
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We think the StockScouter rating system developed by Verus Analytics for MSN Money is one of the best tooks you can use when you're trying to decide where to invest.
StockScouter looks for stocks whose business fundamentals, price behavior, valuation and stock-ownership characteristics appear to predict a rising price in the future, based on how those factors have influenced stock prices in the past.
The system assigns each stock an expected six-month return and balances that return against the stock's expected volatility.
Scouter rates stocks on a scale of 1 to 10, and ratings can change daily. Ratings and data in the chart above were current as of this article's publication date.
In addition to the daily top 10 list described above, StockScouter is used by investment research firm Verus Analytics (previously known as the quantitative business unit of Gradient Analytics) to generate a monthly benchmark portfolio of stocks that, refreshed monthly, has outperformed the market since its inception in August 2001.
An investor who began in 2001 by investing in each of the benchmark portfolio's top 10 stocks at the start of the month, selling them at the end of the month and then starting fresh with a new group of 10 stocks, would have generated returns, before trading costs and taxes, of 1,039 percent through Dec. 31, 2013.
Writer Jon Markman, at the time a columnist for MSN Money, collaborated with company researchers on the tool.
Markman suggested rolling over the top 10 stocks every six months to hold down trading costs, a strategy that might be a better fit for most investors; that would yield different results, which would vary based on your starting point.
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