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.
|
Stock
|
CAPS Rating (out of 5)
|
% Off 12-Month High
|
| AgFeed Industries (Nasdaq: FEED ) |
*****
|
55%
|
| Alvarion (Nasdaq: ALVR ) |
****
|
60%
|
| Sinovac Biotech (NYSE: SVA ) |
****
|
57%
|
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.
Take two, they're small
After stepping away from Microsoft to pursue philanthropy, Bill Gates has funded causes that could improve the lives of millions, including the development of vaccines. Recently, Gates went to China to meet with vaccine developer Sinovac Biotech. Analysts at Piper Jaffray are heartened by the discussions, although they acknowledge that the meeting provides no short-term catalyst for the stock. However, should Gates decide to invest in the vaccine maker, it could lead to an upgrade in Sinovac's facilities and increased production down the road.
At just 14 times trailing earnings, Sinovac seems cheap, but an investment here depends on the discussions with Gates bearing fruit. If you go by Gates' tweets about the trip, he seems to have left with a positive impression.
Investors in Alvarion maintain their own upbeat opinions, despite the so-called death of WiMAX. More than 1,000 CAPS members have weighed in on the wireless broadband systems provider, and 97% say that Alvarion still has the chance to be a monster stock. AT&T (NYSE: T ) and Verizon (NYSE: VZ ) may have built a commanding lead in rolling out their 4G networks, based on the competing LTE standard, but Intel (Nasdaq: INTC ) still believes WiMAX is the better technology,
That said, it's always useful to listen to critics. CAPS member SydParrot argues that if you look at Alvarion's financials, as he did, you'll realize that it's a doomed company unless it gets bought out:
Look very closely at the financials. How much of that inventory will sell? Why are their payables up while shipping less product? I bet they are not paying their bills.
A reserve player
Not long ago, I warned investors to be wary of hog farmer AgFeed Industries. It was hemorrhaging cash and extending terms to customers socked by low hog prices. Shares were some 20% higher back then.
AgFeed's latest quarterly report acknowledged that it's been a difficult period, particularly in light of the floods that devastated parts of the country. Still, the company has curtailed the practice of extending credit to its customers, and it was able to cut receivables by $5.6 million. Yet they're still almost 20% higher than a year ago (and from December, too), while AgFeed's revenue fell 2% -- even though production volumes almost doubled!
Despite all this trouble, highly rated CAPS All-Star mrindependent thinks the market's undervaluing AgFeed is undervalued, precisely because it is producing something the Chinese demand:
Current P/BV is just 0.8. I like this company because it makes products that are used by Chinese industry for eventual consumption by Chinese consumers. Accordingly, I believe the company will prosper if the Chinese currency appreciates.
At just eight times forward earnings, AgFeed does appear mispriced, but U.S. peer Tyson is similarly valued. Only Hormel (NYSE: HRL ) at 14 times 2011's profits, would seem to be trading at a premium to the industry.
More than 1,270 CAPS members have rated AgFeed, and 98% of them think it'll outperform the market. You won't be adding a pig in a poke by adding this company to your My Watchlist page, where we'll corral all our Foolish coverage just for you.
Have half a mind
Sign up today for the completely free CAPS service, and tell us whether these stocks are twice as good at half the price.
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