3 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 three 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  12-Month High

Genco Shipping (NYSE: GNK  )

****

58%

Identive Group (Nasdaq: INVE  )

****

60%

Pain Therapeutics (Nasdaq: PTIE  )

****

62%

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 Baltic Dry Index measures global spot rates for shipping dry bulk commodities such as coal, grains, and iron ore and covers handymax, panamax, and capesize dry bulk carriers. Despite being thought of as a leading economic indicator, the index plunged with the rest of the world economy in 2008 and lost 90% of its value. The culprit was glut of ships on the high seas.

But in noting why he thought Paragon Shipping (Nasdaq: PRGN  ) was an underrated investment, CAPS member iicx says the glut was primarily in large capesize segment.

I think the part everyone is missing about the shipping "glut" is the fact that it principally effects the cape segment. PRGN, in my opinion, offers excellent value with no exposure to the Cape segment. Its also got charter coverage to cover 2011 and 50% of 2012 so [it's] positioned to ride out the storm.

Now ship owners are scrapping capes at a record rate, with 48 already scrapped so far this year and as many as 80 expected in total -- compared with 18 in all of 2010. Yet it won't necessarily help the industry, because of a new monstrosity on the seas: Chinamax ships with the ability to haul twice the capacity of capesizes. Mining giant Vale (Nasdaq: VALE  ) will be taking possession of 19 behemoths.

Genco Shipping is one shipper fueling the glut of ships, expanding its fleet size to 59 ships last quarter compared with 35 the year before. With most of its ships in the supramax category, it's on schedule to accept three more handysize ships. You don't need to look too far to understand why shipping in general and Genco in particular have hit new lows.

Let us know on the Genco Shipping CAPS page whether you think the dry bulk shipper will get swamped by its expansion plans.

Going down with his ship
Credit cards are generally thought of as the leading-edge industry for near-field communications, technology that allows communication over very short distances -- typically just a few centimeters. Analysts are exceptionally bullish on the potential and estimate that it could be a huge $36 billion industry.

A number of companies want to tap the market, including giant NXP Semiconductors (Nasdaq: NXPI  ) and Identive Group, which is using the technology for business marketing opportunities as well as a repository for medical records. It recently received its first orders for terminals to help implement Germany's eHealth card program.

But as the hacking breach at Lockheed Martin all too clearly delineated, having your personal health records electronically compiled on a card is inviting disaster if the data can't be secured. As the Obama administration moves toward adopting e-medical records, the potential for hackers to gain access to sensitive information grows.

Identive hopes to overcome the fear of compromised data by offering proprietary technology with highly secure NFC smart cards that enable multiple applications on one ID credential. It's being tested out on university campuses right now, but the implications for wider use are clear.

Identive is flying under the radar of both Wall Street and Main Street, but only one CAPS member so far thinks it can't go on to beat the broad market averages. Add the security specialist to your watchlist, and have all the Foolish news and analysis about it aggregated for you in one place.

A smaller form factor
The stock of drug developer Pain Therapeutics is in a world of pain because the FDA said the abuse-resistant formulation of oxycodone Remoxy it was making with Pfizer still had too many problems with its chemistry, manufacturing, and controls. It's going to take at least a year before it might be ready for resubmission.

Pfizer, as a big-time drug maker, can afford the wait, and Durect (Nasdaq: DRRX  ) , which provided the extended-release formula, has other products to use its technology on. But Pain Therapeutics had all its marbles on Remoxy (though it does have a metastatic melanoma treatment in early-stage trials and a gene-transfer program at the preclinical stage). Though 97% of the CAPS members rating PT think it can go on to beat the market indexes, there's no near-term catalyst for this stock.

Monitor how well Pain Therapeutic fares down the road by adding the stock to the Fool's free portfolio tracker.

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.

The Motley Fool owns shares of Lockheed Martin. Motley Fool newsletter services have recommended buying shares of Pfizer and NXP Semiconductors. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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 (4) | Recommend This Article (8)

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 July 06, 2011, at 5:42 PM, eremmell wrote:

    INVE is just losing money ... wait until they can turn a profit, before investing in something like this.

  • Report this Comment On July 07, 2011, at 10:33 AM, tjsimone wrote:

    Yes, wait for INVE, and then you will be buying the stock @ 10....

    Like your choices RIch! Question for you...how do you screen for stocks? I own INVE, and have PTIE on my radar, and thanks for the heads up on GNK, I will do further research....

  • Report this Comment On July 11, 2011, at 12:37 PM, OkiWan wrote:

    INVE. Motley. Fools.

  • Report this Comment On July 14, 2011, at 9:35 AM, TMFCop wrote:

    tjsimone,

    I use the CAPS screener and look for top-rated stocks that have fallen well off their lofty perches. The CAPS community isn't foolproof, but in the past their top picks have shown a penchant for performing well over the long haul.

    Cheers,

    Rich

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