Just as we examine companies each week that may be rising past their fair value, we can also find companies potentially trading at a bargain price. While many investors would rather have nothing to do with companies tipping the scales at 52-week lows, I think it makes a lot of sense to determine whether the market has overreacted to the downside, just as we often do to the upside.
Here’s a look at three fallen angels trading near their 52-week lows that could be worth buying.
They pay cash, which is just as good as money!
Gilbert Gottfried may have come and gone, but the Aflac
Aflac is a dividend champion that has raised or maintained its dividend since 1982 and has grown that dividend annually at 20% over the past five years. Unlike Allstate
The patent cliff is a dangerous line to cross, as shareholders of Warner Chilcott
Even with the Actonel setback, Warner Chilcott was still able to offer revenue guidance of $2.7 billion to $2.8 billion, with earnings in a range of $3.70 to $3.80 per share. Based on its current price, Warner Chilcott is valued at an earnings multiple of less than 5! I can’t say I’m completely thrilled by the company’s $4 billion in debt, but it still has an impressive pipeline beyond Actonel to take up the slack. As the company enacts its plan to reduce expenses over the next few quarters, it’s likely revenue may stagnate, but profits should remain consistent. At a mid-single-digit P/E, this could be the perfect pill to pop into your portfolio.
Buy one, get one, half off!
As I stated last week, I’m all about dipping my toes into the retail sector and wading in rather than diving in full force. This week I think American Eagle Outfitters
This week not only demonstrates that fashionable, pill-popping ducks might deserve a spot in your portfolio, but that values abound in the market after the recent sell-off. Feel free to dip your toes in from time to time or you might miss out on the next rally.
What’s your take on these three companies? Are these fallen angels worth a second chance? Share your thoughts in the comments section below and consider adding Aflac, Warner Chilcott, and American Eagle Outfitters to your watchlist.