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.
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.
(out of 5)
% Off 12-Month High
|Cameco (NYSE: CCJ )
|Dolby Labs (NYSE: DLB )
|OmniVision Technologies (Nasdaq: OVTI )
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
You have to wonder whether uranium miner Cameco would have had a higher opinion of the prospects for Hathor's exploration-grade Roughrider mine had the junior miner agreed to a friendly takeover by Cameco. Hathor rejected its bid as too low and Cameco now seems to think the junior miner is building castles in the sky by saying Roughrider could easily support a mine, mill, and other needed facilities.
Cameco's fortunes, and those of other uranium miners, have only gotten worse since the Japanese nuclear crisis earlier this year (and I'm sure the recent explosion at a French nuclear disposal site did nothing to help). Denison Mines shares are down 57% year to date, Uranium Resources is down almost 70%, and even uranium enrichment specialist USEC (NYSE: USU ) is off 67% in 2011. But uranium remains an important resource, particularly with China committed to expanding the number of nuclear facilities in the country.
The point of contention is Cameco's reluctance to pay more for a mine so close to its existing Rabbit Lake mill in Saskatchewan. Hathor's management urged shareholders to reject the hostile $531 million bid, representing a 40% premium, saying it ignores the other assets in its portfolio. Cameco says the Roughrider mine ain't all that; normally you'd expect a company to boost the assets it wants to acquire rather than denigrate them.
CAPS member kcain71 says Cameco's stock has the worst outcomes already priced in, and with uranium prices set to explode, the company is a bargain at these levels:
CCJ is the B.O.B. in the uranium mining sector. The uranium sector is highly oversold due to the Fukashima incident. Also, nuclear warhead recovery is tapering off. The price of uramium is supposed to double in 2-3 years
Add Cameco to the Fool's free portfolio tracker to see whether it's successful in bringing Hathor into the fold.
Sound specialist Dolby Labs suffered a meltdown after Microsoft (Nasdaq: MSFT ) indicated it wouldn't be including its DVD playback codecs in the upcoming version of its Windows operating system. Business was slowed as DVD-less tablets ate into PC sales, and the loss of a significant revenue stream panicked investors, who have sent shares down 35% over the past six months.
Movie rental king Netflix (Nasdaq: NFLX ) underscores the DVD doomsday scenario by separating its DVDs-by-mail offerings from its streaming movies. With the two options now discrete channels, it's gearing up for the disc's eventual demise.
While streaming grows in importance, DVDs aren't in danger of evaporating anytime soon. And even if the Windows 8 rumors prove true, it's not something that will affect Dolby until around 2013. By then it can negotiate directly with PC manufacturers to include the codecs on their machines.
CAPS All-Star Lituus acknowledges the risk the loss of Microsoft poses to Dolby, but points to the end run it can make as well as to other technologies that will be adopting its specialty:
OK, so potentially losing 25% of revenue via Windows seems dire but if you read the details it looks like they will still be able to get much of the PC revenue, just via different partners (though likely at lower margins).
Add the sound specialist to your watchlist and let us know on the Dolby CAPS page if you like what you hear.
Steel yourself for trouble
Shares of OmniVision Technologies took hard the suggestion that it was no longer the apple of Apple's (Nasdaq: AAPL ) eye. The stock plummeted 30% in one day after reporting disappointing earnings that seemed to confirm analyst suspicions it had lost more than half of Apple's business.
Last year, OmniVision lost the iPhone to LG Innotek, causing the stock to fall (though it recovered smartly) and now it's rumored Sony stole at least part of its image sensor business. The thinking is, if Apple's i-candy is selling briskly, OmniVision should be doing a heckuva lot better.
With 96% of the 200 CAPS members rating OmniVision marking it to outperform the market, it seems they're willing to wait for the rumors to play out. Monitor how well it fares 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.