Skip School Stocks

The battered education sector may look tempting, but this is one group that deserves to be cheap and may well get cheaper.

As value investors, we love controversy. Bad news and the uncertainty it brings can wreak havoc on share prices and result in bargains. Our investment in BP (symbol BP) over the summer was a perfect example. As terrible as the oil spill in the Gulf of Mexico was, we believed that the ultimate damage to BP would prove to be less than that implied by the stock’s 50% decline from April to June. From our average purchase price of less than $30, BP has recovered to $41 (all prices are as of the October 14 close), and it remains one of our largest positions. We think the stock will exceed $50 by early next year.

Bad news barrage

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Whitney Tilson
Contributing Editor, Kiplinger's Personal Finance