There is a certain niche of stocks in the market called recovery stocks. These are stocks that have been beaten up due to changing market conditions. Regardless of their size, their markets have gone through a tremendous change recently, and this has put downward pressure on their stock’s pricing. While the energy sector is a classic example of a sector full of recovery stocks, I would venture to guess that the timeline for those stocks is at least several quarters into the future.
If you’re looking for a better and more immediate bet, I would turn your attention to Brazil’s huge mining company, Vale (NYSE:VALE). Vale’s primary product is iron ore. It exports iron ore to markets in Europe and China.
As you can probably tell, the commodities’ market has not exactly been stellar recently. Thanks to the crash in the price of oil, commodities have followed suit. Whether we’re talking about gold, coal, silver, or iron ore, commodities have been depressed. There’s really no other way around it. Since Vale is a massive mining company with its fingers on many different commodities, it has been beaten up quite a bit.
How bad has it been for Vale? Its earnings per share was reduced by almost 66%. It started out at $2.38 in 2013 to 86 cents in 2014. That’s how bad its fortunes have been.
If there is one stock that is worthy of being called a recovery stock, it is Vale. Why? It’s a huge company and has a massive infrastructure. It has a solid footprint in all major markets and if the global economy begins to turn around, you can expect an upward spike in the demand for Vale’s products. Currently, the stock has been depressed quite a bit, and I would wait for it to sink further before scooping up some shares.