<div id="readability-page-1">One of many Hormel Foods Corp. products. Hormel is one of five stocks that have been punished in the third quarter and that appear to this columnist to have comeback potential. Photographer: Daniel Acker/Bloomberg © 2016 Bloomberg Finance LP Stocks that have been banged up, and that I believe have underlying strengths, are some of my favorites.  They are also fodder for my quarterly Casualty List. I’ve compiled this list since 2000, and it has beaten the Standard &amp; Poor’s 500 Total Return Index by a decent margin.  The latest quarter was a good one for the market, with the S&amp;P 500 returning about 8%. But some stocks were still roughed up, and I think I see a few that can survive and thrive. Here are five of them.  You probably associate Hormel Foods Corp. (HRL) with ham and bacon, its best-known products. But it owns about 40 brands, including Dinty Moore, Herb Ox, Lloyd’s, and Planters. It sells its foods in some 80 countries.  The stock fell 17% in the third quarter, mostly because rising costs for pork and beef are squeezing its profit margins. At the stock’s recent price of about $25, it sells for 1.1 times revenue and 2.7 times book value (corporate net worth). I find those multiples attractive.  Wall Street is unenthusiastic about the stock, with only two analysts rating it a “buy” out of a dozen who cover it. But I like the company’s historical record. Hormel went public in 1928, and has never posted a loss. That’s a 97-year profit streak.  MORE FOR YOU Amdocs Ltd. (DOX), based in Lt. Louis, Missouri, provides software and services to communications and entertainment companies. Its software is used in streaming and in mobile phone service, among other things. Historically, its biggest customer has been AT&amp;T.  Although the stock was down more than 9% in the latest quarter, analysts are keen on it. Seven Wall Street analysts cover it, and six of them recommend it.  In the past year, revenue at Amdocs fell about 3%, but earnings were actually up. The revenue decline happened because Amdocs was shedding some low-margin businesses.  I mentioned Eastman Chemical Co. (EMN) recently in a column about insider purchases. On August 27, Mark Costa, the company’s chief executive officer, spend just over half a million dollars to increase his stake.  On the same day, William Thomas McLain Jr., the chief financial officer, spend about $252,000 to add to his holdings. Nine other insiders made smaller purchases.  Their buys came in the midst of a quarter during which Eastman Chemical shares fell 17%. I believe signs of a slowing economy were the reason for the drop. Short-term, the pessimists may be right. But I think Eastman is a good holding for longer-term investors.  Based in Antioch, Tennessee, LKQ Corp. (LKQ) recycles auto parts. It operates some 1,500 high-tech junkyards in the U.S. and Europe, selling parts to body shops and repair shops.  I figure that car prices in the U.S. will be rising, mostly because of tariffs. Therefore, people may keep their cars longer, which would help the recycled-parts business.  LKQ shares declined almost 17% in the past quarter as both sales and earnings for the second quarter missed expectations. Much of the soggy result came from European operations. I’m not sure, but it looks to me like economies in Europe are starting to perk up.  Ingredion Inc. (INGR) makes ingredients for foods and beverages, including brewing and animal feed. Sweeteners (high fructose corn syrup and stevia) are a specialty.  Although Ingredion’s revenue dipped in the past year, earnings were strong. So, I find it surprising that the stock fell 9% last quarter.  I consider a return on stockholders’ equity of 15% to be excellent. Ingredion has achieved that in 11 of the past 15 years. The stock seems cheap to me at 12 times earnings.  My Casualty List selections over the years have averaged a 14.3% return in 12 months. For comparison, the Standard &amp; Poor’s 500 Total Return Index has averaged 11.6% over the same periods.  Those averages are based on 86 Casualty Lists, beginning in June 2000. The list you’ve just read is the 90th, but it’s too soon to calculate one-year returns for the latest few.  My Casualty List picks have been profitable in 54 cases out of 86, but have beaten the index only 39 times. On average, my wins have been by a greater margin than my losses.  Of my four picks a yea ago, only Visteon Corp. (VC) excelled, rising nearly 32%. Occidental Petroleum Corp. (OXY) was the stinker, falling 18%. Amkor Technology Inc. (AMKR) was close to unchanged, while Humana Inc. (HUM) rose about 22%.  That works out to a 9.01% return for the October 2j024 portfolio, which fell well behind the 19.44% total return for the S&amp;P 500.  Disclosure: I don’t currently own any of the stocks discussed in today’s column, personally or for clients.</div>

<p>Hormel Foods Corp. and Amdocs Ltd. are highlighted in a quarterly Casualty List, which identifies stocks with potential despite recent declines. Hormel's stock fell 17% due to rising costs, yet its historical profit streak since 1928 is notable. Amdocs, down over 9%, has strong analyst support despite a revenue dip from shedding low-margin businesses. The Casualty List has historically outperformed the S&P 500, with an average return of 14.3% over 12 months. The latest list includes five stocks with comeback potential, reflecting the author's investment strategy.</p>

Hormel And Amdocs Hit The Casualty List