Hunting Bargains In A Bull Run
I hope you are enjoying this year's strong market.
True, we had a wobble last week, with heavy selling in Japan prompting some profit-taking on the FTSE.
But the bank holiday seems to have helped the index regain its composure, with a 100-point jump seen early yesterday.
It just goes to show how unpredictable the market's daily movements can be -- and how us Fools should always view our shares with the long run in mind.
(Of course, I still have my balloons, party hat and champagne at the ready for the day the FTSE closes above 7,000!)
But what about if you have lots of cash to invest now?
Still, rising share prices won't please everyone. Certainly, if you're sitting on a large pile of cash -- or are fortunate enough to be able to invest regularly with fresh money -- finding tomorrow's winners in this bull run may not be so easy.
So on your behalf, I sat the ace team at Motley Fool Share Advisor round the table and demanded they tell me how they were looking for genuine bargains in the current market.
Not surprisingly, the Fool's brightest stock-pickers admitted they were working just that little bit harder to deliver what they consider to be two 'bargain buy' recommendations every month.
However, they also pointed me in the direction of three shares they'd recently evaluated, and gave me their opinions.
Sadly, the Share Advisor team didn't want me to reveal the trio of shares in question within this e-mail. But you may be able to work out the companies yourself from my meeting notes below.
Here's the team's thoughts:
Bargain tip 1: Go for growth
Charly Travers kicked things off by telling me to pay up for growth and not to keep looking at the past.
He gave a FTSE 100 company as an example, which he said had tripled its free cash flow to £759m between 2009 and 2012. However, he also said the share price had gained 'only' 75% in the same time.
As such, he explained that he thought the company now looked a lot cheaper than it did a few years ago - even though the current share price is testing fresh highs.
Just so you know, Charly was convinced paying 15 times cash flow for this name could be a great opportunity, given the firm's past growth rate and how its leading product enjoyed a 28% sales jump last year.
I had to nod in agreement.
Bargain tip 2: Go overseas
Nathan Parmelee then told me to look beyond the FTSE and seek opportunities in less buoyant markets.
You see, he reckoned few British investors ever look at overseas shares, even though many foreign companies have dual London listings and generate sizeable UK profits.
He also cited Ireland as a possible fertile hunting ground, as its stock market remains 60% below its all-time high. (So no balloons or party hats required there just yet).
Nathan revealed one Irish name on his radar currently enjoys an enormous 37% market share in the UK and sells its products through all the major supermarkets. The firm has agreed to supply a popular American chain, too.
Nathan told me that he thinks the shares trade at "about 20% to 30% below fair value for a business that has a significant growth opportunity in the US".
No wonder he was so keen on the company.
Bargain tip 3: Go contrarian
Finally, Nate Weisshaar chimed in by telling me he always liked to sift among the market's laggards to find a winner.
Now he confessed it was harder to find market losers with the FTSE so buoyant, but he was convinced there were still opportunities around.
Indeed, Nate reckons he has spotted an attractive laggard that's delivered "less than inspiring numbers" for 2012 and then issued a profit warning for the first quarter of 2013.
So this company certainly appears to have a contrarian feel about it.
Yet Nate said the firm has a balance sheet loaded with net cash and offers exposure to cutting-edge technology that could mean 'no more buffering' on the internet (or so he told me).
Before he left the table, Nate claimed this unloved share could be worth 180p. I've just checked and it currently trades around 135p.
More bull-market 'buys' from Charly, Nathan and Nate
My roundtable discussion with Charly, Nathan and Nate could have lasted all day
However, I had to let the team get on with trying to pinpoint what they believe could be the market's cheapest bargains for members of Motley Fool Share Advisor.
Still, I hope their advice could help you invest with confidence, especially given how the FTSE has soared more than 1,000 points during the last 12 months.
Do however keep in mind that the value of shares can fall as well as rise, and investing in the stock market always comes with a risk of negative returns.
That said, looking at the team's official 22-share 'buy' list, I reckon you could easily create a diverse portfolio offering a choice mix of rosy growth, international opportunities and contrarian ratings.
If you have cash to invest, you can potentially benefit from this year's strong market by learning all about these 22 'buys' today. Just join Charly, Nathan and Nate at Motley Fool Share Advisor by clicking here.