This post originally appeared on TraderPlanet.com.
Everybody is looking to find a stock that they can get a big return on. Well, what if I told you that I know of one that could potentially yield you a “twelve-bagger?”
That’s right–this stock could go up as much as 1200% from its current price.
This company seems to have all the right stuff, earning twice as much profit per dollar as the U.S. average for other companies in its field. Its product is considered the highest quality and is more desirable than its competitors.
THE BLOOMBERG STORY
This company is massively undervalued, and it not just me that thinks this. In fact I am basing this on the comments of industry experts quoted in Bloomberg no less.
Timothy Parker, who oversees $8.5 billion in stock at T. Rowe Price Group says in the article that the company’s product is “the bees knees” and Bloomberg itself says that based on similar median earning on other buyout deals in the same space, this company’s stock could fetch as much as $192.00 a share.
“It’s really an obvious takeout candidate, especially after the CEO resigned,” said Eric Green, a Philadelphia-based fund manager at Penn Capital Management, which oversees $6.5 billion….
While J. Christopher Haberlin, an analyst at Davenport, estimates the company may fetch between $185 and $215 a share, David Beard, an analyst at Iberia Capital Partners LLC, pegs a takeover at about $160 a share.
(it) was also one of more than 40 companies that Bloomberg identified in March that met the acquisition criteria Warren Buffett listed in his annual letter to shareholders. Buffett typically prefers “simple” businesses with pretax profit exceeding $75 million, “consistent” earning power, and “good” returns on equity while employing little or no debt, according to his report to Berkshire Hathaway Inc. (BRK/A) shareholders.
“Now is a good time to sell the company because of the near-record prices for met coal, strong global demand and constricted global supply,” said Davenport’s Haberlin, who’s based in Richmond, Virginia. “The assets have more value now than ever.”
The company should sell because it “now lacks the strong leadership needed,” which is “weighing on the share price,” Audley Capital, which owns 900,000 shares, or about 1.5 percent of the company, said in a July 17 letter to the board.
Walter Energy could fetch $240 a share in a takeover, based on the 2012 earnings multiple that Peabody Energy Corp. ($BTU) and ArcelorMittal are offering for Macarthur Coal Ltd. ($MCC), the letter said. That would be double Walter Energy’s closing price of $119.64 yesterday.
Wow…..So many experts with so much solid fundamental information on Walter Engergy ($WLT). I mean Bloomberg wouldn’t print this if these guys didn’t know what they were talking about, right?
CHARTS DON’T LIE
Here is a current chart of $WLT.
This chart starts on July 1, 2011, the day the Bloomberg article from which the above info was taken was published, when $WLT was trading at $121.00 per share. Today it is $19.00 per share.
DO YOUR OWN WORK
I have pounded to the table for years now on how you cannot rely on “experts” and you cannot use fundamental data or “stories” to trade and invest in the markets. Fundamentals are not objective and “experts” usually have an agenda. This example in $WLT, and there are hundreds of others like it, shows you why, in order to be a successful in the markets, you need to do your own work, focus on the technicals, and just tune all this other junk out.