Today during research into company fundamentals for GE – post Credit-Swisse meeting – I stumbled on a strongly undervalued stock that should be back to at least on-value by the end of the first quarter of next year.
Ally Financial is a well known bank and consumer finance company. Year-to-date they’ve lost 0.2% in sales volume, which caused them to lose significant value during the month of October. They fell from a high of around $25 and dipped below their 200-day moving average on October 28th, in a dramatic move that pushed RSI above 75 indicating a heavily oversold condition.
Consensus is building to indicate that next quarter’s earnings report (on January 31st, before market) will be 7.5% higher than last quarter. With this unexpected jump in earnings Reuter’s has upgraded their price target to the previous high of $25, and the market is beginning to react. We have acquired a position at $19.72, and expect to be able to exit that position with a 25% return by the end of Q1 next year.