5 Top Stocks at Half Price

You love buying your shirts when they go on sale. And who can resist a buy-one-get-one-free offer? So when our stocks go on sale, why do we bemoan their low prices?

Smart investors like Warren Buffett or Marty Whitman love it when their stocks are suddenly selling at bargain-basement prices. For them, these companies become no-brainer buys.

The investors in the Motley Fool CAPS community also like a bargain, apparently. Below, you'll find five companies whose shares are selling at least 50% below their 52-week highs but that still earn high honors from our investor-intelligence database. Consider it a BOGO sale on stocks.

Stock

CAPS Rating (out of 5)

% Off 52-Week High

Lexicon Pharmaceuticals (Nasdaq: LXRX  )

****

62%

Melco Crown Entertainment (Nasdaq: MPEL  )

****

51%

Popular (Nasdaq: BPOP  )

****

60%

USEC (NYSE: USU  )

*****

52%

Vaalco Energy (NYSE: EGY  )

*****

52%

Naturally, we want you to look a bit closer at these stocks before buying. You can get low-priced appliances in the dent-and-ding section of your home-remodeling superstore, but their quality might not be so good. Same thing here: Make sure there's nothing seriously wrong with the company before you plug it in to your portfolio.

Take two; they're small
The Macau casino market is supposed to be the gambling hall that's going to turn around an industry. Driven to distraction by the recession, Las Vegas Sands (NYSE: LVS  ) and Wynn Resorts (NYSE: WYNN  ) both placed major bets on opening casinos in the only Chinese city where gambling is legal, by launching IPOs on the Hong Kong stock market.

The reception, however, looks like it has petered out. Wynn's overseas stock has fallen by 5% since its IPO, and Sands fell 10% on the first day of trading. Lady Luck isn't smiling on the casino operators, either. Melco Crown Entertainment, however, is a pure play on the Macau market, but despite a 70% surge in third-quarter revenue, losses for the Chinese casino operator also widened to $39.5 million from $21.1 million in the year ago period.

Looking at Melco's opportunity from a technical-analysis perspective, CAPS member akclide sees the gambling house performing better than either Wynn or Sands.

Technically it made a triple bottom on a 6 month chart, Moving averages are trying to converge. P/s Ratio is actually better than that of LVS and WYNN, both direct [competitors]. LVS sand IPO coming out will also give boost 1st stop $5 which is approx 18% return. I expect hold time between 30-60 days.

Nothing to be irritable about
You might not want to admit to having irritable bowel syndrome, but sufferers and investors won't be cramped by Lexicon Pharmaceutical's treatment, which reported positive results in a key clinical trial. The drug developer said patients taking 1 gram of its therapy four times a day had less pain and discomfort than did those who took a placebo.

IBS -- a surprisingly little-understood condition -- afflicts 20% of the adult population, according to the National Institute for Health, and is accompanied by abdominal pain, bloating, and discomfort. Lexicon's LX1031 relieves those symptoms without causing constipation, which otherwise might be a case of the cure being just as bad as the disease.

With a steady flow of other treatments due to report results over the coming year, however, CAPS member topsecret09 thinks Lexicon won't get backed up if one of them should end up stumbling: "With many key trial results being announced over the next 12 months, this biotech seems like a logical addition to [anyone's] portfolio, with a fairly low degree of risk at this currently depressed stock price of $1.63."

Lexicon is still in early development on a Type 2 diabetes treatment, as well as ones for rheumatoid arthritis and carcinoid syndrome. At more than 17 times sales, the pharmaceutical's shares seems a bit gaseous, particularly as revenues in the most recent quarter collapsed 72% from last year.

Have half a mind
It pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page.

Sign up today for the completely free service, and tell us whether these stocks are twice as good at half the price.

Melco Crown Entertainment is a Motley Fool Global Gains pick. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Rich Duprey has no financial position in any of the stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.


Read/Post Comments (6) | Recommend This Article (13)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 01, 2009, at 12:57 PM, spokanimal wrote:

    Re: Your Melco comments;

    When you contrast the positive (70% revenue surge) with the negative ($39.5 million loss), it's hard to imagine that you wouldn't provide the not-so-inspiring reason for the revenue surge... the opening of COD in May hardly makes for a valid year-over-year comparison.

    A reader who's not aware of the COD debut would have been very mislead by your comments on Melco.

    Separately, it does look like the gaming reception has petered out as both Wynn's and Sand's chinese issues have gone below their IPO price. The question is... it it justified?

    No. With overall Macau revenues surging and the EBITDA expansion we saw in Sand's Q3 report (not to mention yet another double-digit EBITDA expansion that Sands expects for Macau in Q4), the stock prices are clearly swimming against the positive current... expecially in light of the solid Chinese purchasing managers numbers we saw overnight.

    ... and it's like Marina Bay Sands doesn't even exist!!

    Spokanimal

  • Report this Comment On December 01, 2009, at 10:39 PM, topsecret09 wrote:

    Thanks for the shout out Rich.... I really like this one a lot. Biotechs In their early years of drug discovery trade on trial news. This company has solid financial backing with (INVUS) to the tune of 550 million dollars{If needed} For now INVUS Is happy as stake holder,and has members that sit on Lexicons board,Including the President of INVUS Itself. They have puchased over 66 million shares of Lexicon,which Includes their last purchase of just over 15 million shares @ $1.50 per share on October 15th,2009.... INVUS Invests their capital In companies that show tremendous LONG TERM promise. I would say they are speaking rather loudly here..... TS

  • Report this Comment On December 02, 2009, at 4:23 PM, topsecret09 wrote:

    Lexicon seems like It may be perking up a bit... I would not hesitate to put this one In an IRA and forget about It at these price levels. Their drug pipeline Is solid,and this Is a possible home run stock In my humble opinion.... TS

  • Report this Comment On December 04, 2009, at 8:18 AM, estabank454 wrote:

    Hello All,

    Concerning the first comment...It has just been learned that China may reduce the gambling taxes by almost 40%. Does that help Melco Entertainment???

    I look at the stated earnings per share. All state losses for WYNN, LVS and Melco, but Melco is the least by half against LVS and is a third of WYNN's losses.

    I still say that Melco has a better chance being in Macau, which has no ties to the U S Economy. After paying all the debt from building COD, I believe their ability to become positive when you have a billion people in the immediate vicinity.

  • Report this Comment On December 11, 2009, at 11:32 AM, estabank454 wrote:

    When are press releases and all going to be placed on this stock. Looks like you guys never update...Bloomberg has given some great comments, Larry Haverty from Gabelli states that Macau is hot!!!!

    I just saw on google that predictions for revenue and earnings growth places MPEL for 3-5 growth and they ranked #7 on a very long list.

    Being next to a billion Chinese who are notorius gamblers and I don't think you can have enough casinoes...not counting the region around southeast asia.

    When are you guys going to update.?? I am tired of seeing the news about their losses on Nov 17th--this is December--things are moving...

  • Report this Comment On December 15, 2009, at 6:58 PM, topsecret09 wrote:

    . At more than 17 times sales, the pharmaceutical's shares seems a bit gaseous, particularly as revenues in the most recent quarter collapsed 72% from last year......... I think the gas that you speak of just might be helium............ TS

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