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.
CAPS Rating (out of 5)
% Off 12-Month High
|Excel Maritime (NYSE: EXM )||****||52%|
|North American Palladium (NYSE: PAL )||****||51%|
|Penson Worldwide (Nasdaq: PNSN )||*****||51%|
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.
Considering the sinking feeling experienced by dry bulk shippers Excel Maritime, Star Bulk Carriers (Nasdaq: SBLK ) , and Diana Shipping (NYSE: DSX ) , it's easy for investors to get worried about going down with the ship. Industry conditions are poor, and shippers have too many carriers depressing charter rates.
What investors need to do is look for those companies that can sail to the leeward side of the market. Excel, despite seeing a 20% drop in its average daily time charter equivalent rate from last year, still reported an adjusted profit that beat expectations of a loss, and it was able to grow free cash flow sequentially. The stock may be storm-tossed right now, but it looks like it ought to be able to avoid joining other carriers heading to Davy Jones' locker.
Unsurprisingly, some investors like CAPS member ArlHomRob don't think Excel is seaworthy simply because of the sector it operates in, yet others like All-Star Chemdawg look at its financial hull and find it shipshape.
with a 20 plus book and over 2 bucks per share in earnings, this is more than cheap ..this is ridiculous ... low debt ratio and when the economy picks up this will as well.
Let us know on the Excel Maritime CAPS page whether this dry bulk shipper can make it back to port.
All that glitters isn't gold
After riding the commodities frenzy to new heights, palladium, along with all the other precious metals group components, have fallen from their recent highs, some dramatically so. Palladium, in fact, has performed much worse than platinum this year, so it's not surprising the stocks of North American Palladium and Stillwater Mining (NYSE: SWC ) have taken it on the chin.
Yet there's pent up demand for palladium as economies improve and the auto industry recovers. Palladium is a key metal used in the manufacture of catalytic converters. And there's a shortage of the metal, the worst in 30 years. Both NAP and Stillwater, the only U.S. palladium miner, stand to benefit from the market conditions.
CAPS member TMFGalagan sees those forces pushing North American Palladium's battered stock higher.
Stock took huge hit on bad earnings, but it has a history of ignoring those hits and rebounding. If palladium stays up, then the stock should bounce back.
The Fool's free portfolio tracker can aggregate all the news about NAP and whether the stock will become a precious component of your portfolio.
Off to the races
Securities clearinghouse Penson Worldwide was pummeled by the disclosure that one of its directors had ties to a Texas racetrack operator for which Penson held some $42.6 million in bonds. The trading collateral could cause a "material" writedown for the clearinghouse, although it still expects to exit the transaction without a loss. And if it did lose money, it wouldn't affect its financial condition.
Still, the markets weren't enthused about the revelation and sent its already falling stock screaming lower. Some analysts were concerned the situation could provide rivals that include MF Global (NYSE: MF ) and units of Goldman Sachs with a chance to steal clients away.
Considering Penson says it will largely be unaffected by the bond dealing and the director in question resigned, the subsequent huge sell-off of the stock seems unwarranted. CAPS member WPThatcher agrees the market is giving investors a big discount.
EXTREMELY CHEAP! Trading at less than half of its 52-week high, less than half of book, sales and sales. Single-digit forward P/E. Negative enterprise value.
Tell us in the comments section below or on the Penson Worldwide CAPS page whether you think the company is in the clear.
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