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
|McDermott (NYSE: MDR )||*****||57%|
|SandRidge Energy (NYSE: SD )||****||55%|
|Taseko Mines (NYSE: TGB )||*****||60%|
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
Blowouts in the oil industry have a negative connotation, particularly after the Macondo well disaster in the Gulf of Mexico last year. Oil-services leader McDermott suffered a blowout of its own last month however when it reported profits sank despite rising revenues as sales in the Middle East fell 30%.
The marine services specialist is in transition, adding on more subsea work and deepwater work in particular. While shallow water and mid-water levels will remain McDermott's core business -- and it isn't abandoning that -- it appears the transformation under way will take its toll on profits as it doesn't foresee second half margins rising about the 10% to 12% level.
Management, though, feels it was mostly a second-quarter issue that brought business low and feels with its ties to Saudi Aramco, which provides 40% of its annual revenues, and to a lesser extent with Chevron (NYSE: CVX ) and ExxonMobil (NYSE: XOM ) , it remains well-positioned to recover.
Perhaps it is the long-term bullish outlook for oil that forms the opinion of CAPS members who remain overwhelmingly supportive of McDermott's prospects. Of more than 1,300 members who've weighed in, 98% see it still beating the market. Add McDermott to the Fool's free portfolio tracker and then head over to the McDermott CAPS page and give us your feelings on its future.
If McDermott is having troubles in the oil field, though, it might have been an inopportune time for SandRidge Energy to make the transition from a largely natural gas producing company to one primarily focused on producing oil.
While SandRidge was following others like EOG Resources (NYSE: EOG ) into oil, now it's doubling down on the effort with an ambitious capital spending program that will spend nearly $2 billion this year and next. It is selling off natural gas assets, IPO'd SandRidge Permian Trust, and is looking to sell off other assets that might bring in some cash.
Since the stock has fallen sharply since its last earnings report and has remained weak after that, investors seem somewhat ambivalent about the direction the oil and gas play is taking. CAPS member Charlie9665 isn't enamored with SandRidge's spending plans, but like McDermott, the broader CAPS community remains behind its potential.
Steel yourself for trouble
With copper falling to 14-month lows, it's understandable why Taseko Mines has dropped as well. Recently Joy Global (Nasdaq: JOYG ) asserted that the metal has "the strongest fundamentals" as supply concerns grow because of production level declines, and that the spiraling problem of European finance undercuts what would otherwise be a bullish situation. The crisis overseas naturally leads to concerns of significant economic decline, tapping out demand for the industrial metal.
While there's an immediate concern there, Taseko remains an otherwise interesting pick. With its Prosperity mine moving toward approval and its stake in the Gibraltar project warranting a significantly larger valuation, the severely degraded stock price can no longer be ignored.
I've joined the other 1,901 CAPS members rating Taseko to outperform the broad market indexes,
But you can monitor how well it 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.