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 three companies whose shares are selling at least 50% below their 52-week highs, but which still earn high honors from our investor-intelligence database. Consider it a BOGO sale on stocks.
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Stock
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CAPS Rating
(out of 5)
|
% Off 52-Week High
|
|
A-Power Energy Generation Systems (Nasdaq: APWR )
|
****
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53%
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|
GMX Resources (NYSE: GMXR )
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***
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58%
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|
Lexicon Pharmaceuticals (Nasdaq: LXRX )
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*****
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60%
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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 into your portfolio.
Wait and see
Maybe A-Power Energy Generation Systems was laughing at Wall Street after its previous quarter's results, leading at least one cheeky analyst to rashly forecast that the company would generate about $600 million in revenues for the full year. No dice. Sales guidance for 2010 came in at just $380 million, far short of the slightly more modest consensus view of $543 million.
The wild swings underscore the reason why the Fool's Toby Shute avoided taking a stab at a possible valuation on the turbine maker. Even with a joint venture deal with General Electric (NYSE: GE ) , A-Power defies those who want to analyze it appropriately just yet.
Of course, that doesn't stop investors from trying, and CAPS member alabama4606 appropriately takes a long-term view when trying to assign a value to A-Power.
Certainly some question marks about management, and their [credibility] has come under intense scrutiny recently on the back of this peculiar share placement which came out of the blue for shareholders. On the bright side they have important partnership in place with GE and German company Fuhrlander, and plenty of lucrative contracts in place. The question is, can they deliver? If they can, this stock will soar higher and higher over the next 5 years.
Demand still catching up
Not only are we awash in a sea of natural gas, but Baker Hughes (NYSE: BHI ) reports we're drowning in a morass of rigs, too. Despite burgeoning inventories and lower prices, industrywide natural gas rig counts in the U.S. rose yet again last week, this time to 949. So it's little wonder analysts marked down natural gas developers GMX Resources and PetroQuest Energy (NYSE: PQ ) .
However, with President Obama channeling his inner wildcatter and agreeing to allow offshore drilling, investors like CAPS member gjg7777 hope he feels the same about the Natural Gas Act, which aims to increase the use of natural gas by the government and private consumers. It's no surprise billionaire T. Boone Pickens has been working hard to get it passed. His Clean Energy Fuels (Nasdaq: CLNE ) is the largest provider of natural gas for transportation in North America.
With 95% of CAPS members rating GMX Resources to outperform the market, it seems a few people would agree. However, the prospects for higher natural gas prices don't seem encouraging, so I'm going to head over to the company's CAPS page and mark it to underperform the broad averages.
More good news on the way?
Lexicon Pharmaceuticals offers positive results in mid-stage trials of its irritable bowel syndrome therapy, and a similar result in trials for its experimental diabetes drug. But the market didn't appreciate the company's decision to dilute its shares with a $165 million share offering that will nearly double its share count.
All-Star CAPS member zzlangerhans, who follows biotech closely, says that while Lexicon investors might not be happy about the offering, there are further positive developments on the horizon.
The current low comes courtesy of another large dilutive financing which should keep the company comfortably solvent for at least another year. While the next trial of LX4211 hasn't yet been initiated, the most likely source of an upward gap this year is phase II data for arthritis compound LX2931.
Have half a mind
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