What to Look for in Discounted Issues
HIGH MARKET CAPS
Highly valued companies are less likely to get lost on Wall Street. Mutual funds and other institutional investors often are barred from buying companies with less than $100 million or $200 million in value.
ANALYST COVERAGE
If no analysts follow a company, its stock is more likely to remain depressed even if profits and prospects improve. More coverage increases the stock's visibility and chances of strength.
SPINOFFS
Fast-money investors often pass up the spinoffs of established corporations' divisions. These deals, such as DuPont's sale of Conoco, tend to have less hype and can result in fewer disappointments.
FINANCIAL STRENGTH
Companies with strong balance sheets--relatively more equity and less debt--can endure troubles better than those that are highly leveraged.
DATA: OTIVA, STANDARD & POOR'S
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