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. Here, 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

Exelixis (Nasdaq: EXEL  ) **** 56%
Stillwater Mining (NYSE: SWC  ) **** 69%
USEC (NYSE: USU  ) **** 81%

Source: Motley Fool CAPS.

Not every short sale goes as planned, making shorting a risky proposition. Stock prices can be irrational longer than you have money to stay in the game. So don't use this as a list of stocks to sell or buy -- just the launching pad for further research.

Searching for a solution
Although some analysts believe a new prostate cancer drug from Bayer may make the attempt by Exelixis to bring its own treatment to market superfluous, Medivation's (Nasdaq: MDVN  ) therapy has the potential to jump ahead even further. There's talk of possibly stopping clinical trials early because of the reported success so far, similar to what happened with Johnson & Johnson's Zytiga.

In fact, prostate cancer has become a hot area for research, and though sales of Provenge from Dendreon (Nasdaq: DNDN  ) have thus far proved disappointing, it was one of the drugs that really got the ball rolling in this area. More so than any one particular therapy proving far and away better than another, it appears Exelixis' biggest threat is just that so many pharmaceuticals and biotechs are pouring money into the space, it could get lost in the crowd. Some researchers think prostate cancer drugs could generate almost $9 billion in sales before the decade's out.

Highly rated CAPS All-Star and biotech guru zzlangerhans has concerns about the FDA further down the road, but he sees Exelixis having good prospects nearer term, in spite of possible hurdles.

There's not much time before topline data is announced from the EXAM phase III trial of cabozantinib in medullary thyroid cancer. That's a rare form of cancer, but I wouldn't underestimate the power of the first successful phase III trial in Exelixis' long history. It also would establish proof of concept for a drug that has also demonstrated significant positive phase II results in ovarian and prostate cancer, which are vastly larger markets.

Add Exelixis to your watchlist and see whether it's able to make it past regulatory agency roadblocks and cutthroat competitors.

Driving a rebound
U.S. auto sales revved their engines in September, rising about 10% in September, with the annual sales rate exceeding 13 million vehicles, the strongest rate since April. General Motors saw sales jumped 20%, Ford (NYSE: F  ) sales were up 9%, and Chrysler paced the pack with a 27% increase in sales.

Whether those numbers hold up as the year gets long in the tooth remains to be seen, but it is good news for palladium miners like Stillwater Mining and North American Palladium (NYSE: PAL  ) , whose output is a key component of a car's catalytic converter system. A healthy auto industry leads to healthy mining results.

The economy in general, and the auto industry in particular, have weighed heavily on Stillwater and NAP. The former, though, is angling to give itself more exposure to other metals, including gold and silver, by purchasing Peregrine Metals, an Argentinean miner. It paid a heavy price for the purchase though, in terms of actual deal numbers and the toll it took on its stock.

With prices of the silver metal bouncing sharply higher last week, CAPS All-Star member JackCaps thinks investors overreacted in recent weeks, and he finds Stillwater an alternative inflation hedge.

Tell us on the Stillwater Mining CAPS page or in the comments section below if you agree, and then follow its progress by adding it to your watchlist.

The nuclear option
Maybe the Department of Energy would have been better off giving a $2 billion loan guarantee to USEC's uranium centrifuge project than the half-billion guarantee it made to politically connected solar-energy firm Solyndra.

Without bankrolling campaign cash, USEC's had a hard time securing the guarantees for a project that's more in the national interest than yet another solar panel maker. DOE originally rejected the guarantees in 2009, but it has tried to generate support for them since. The regulatory foot-dragging has USEC planning on stopping the project soon if the money doesn't come through by November.

Nuclear energy has had a rough go of it since Japan's disaster earlier this year, with uranium miner Cameco down 56% from its 52-week high and Denison Mines off 75%.

CAPS member NOMNOM thinks DOE will eventually come through, which evidently comports with the view of the broader CAPS community, 96% of whom think it will outperform the broad market averages. You can tell us on the USEC CAPS page or in the comments section below if you agree, and then follow the negotiations by adding it to the Fool's 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. Weigh in with your own thoughts on which stocks you think can keep the dogs at bay.

Fool contributor Rich Duprey owns shares of North American Palladium, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Dendreon, Johnson & Johnson, Ford Motor, and Exelixis. Motley Fool newsletter serviceshave recommended buying shares of Exelixis, General Motors, Johnson & Johnson, and Ford Motor and creating a diagonal call position in Johnson & Johnson. 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. The Motley Fool has a disclosure policy.


Read/Post Comments (2) | Recommend This Article (7)

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 October 11, 2011, at 10:01 PM, dcsilver wrote:

    Normally I glance at these stocks and just move on. However, for the second time in recent memory Rich Duprey has written an article that is either downright ignorant, or is intentionally misleading. The last time he backhanded a compliment to one of my stocks was NVAX. You can see my past blogs for that. For those of you who have heard the recent Brett Farve stories about how he gave thirty backhanded compliments to Aaron Rogers in a one minute interview last week, I guess Mr. Duprey was listening. Nothing worse than a backhanded compliment. Therefore Rich Duprey is my FOOL of the week.

    The first paragraph starts:

    Although some analysts believe a new prostate cancer drug from Bayer may make the attempt by Exelixis to bring its own treatment to market superfluous, Medivation's (Nasdaq: MDVN ) therapy has the potential to jump ahead even further. There's talk of possibly stopping clinical trials early because of the reported success so far, similar to what happened with Johnson & Johnson's Zytiga.

    These drugs currently do not work. If their ultimate success were a foregone conclusion, their stock prices would skyrocket. The line that says “there’s talk of possibly stopping clinical trials” must be between Mr. Duprey’s two imaginary friends. Since this is a news website, show some journalistic prowess and cite to your source.

    I do not mind, nor do I disagree that prostate cancer drugs are a competitive field. But to say that any company either currently dominates that field or has a drug to cure prostate cancer or help patient live significantly longer lives is a joke at best, and downright wrong. Even as his article alludes, $9 billion in sales before the decade is out, is pretty significant. Bayer/MDVN might have commercial success first, but if a better drug is produced by EXEL, the medical community would embrace it immediately. The fact is all of these development drug companies are fighting to prove that their drugs work. Need I remind you that MDVN was trading at $40 a share and plunged to $13 on March 13, 2010 because their treatment for Alzheimer’s disease Dimebon failed. Baby biotech investing is a dangerous game.

    Now, if Mr. Duprey simply said that EXEL was boom or bust (shout out to GKOR), because there is not much time before topline data is announced from the exam phase III trial of cabozantinib in meduallary thyroid cancer, I would respect that. You need chutzpah, a stomach of steel and a bottle of pepto to be invested in this stock at the moment. Investors of EXEL are looking to those topline results to validate the proof of concept for cabo, the only relevant drug in EXEL’s pipeline.

    Now, as my other posts can tell you, I’m long on EXEL. I’m a member of MDP and I’m riding this one out with the rest of the MDP Fools. I’m hoping for the best, but I’m prepared if the topline results fail, because I understand the risk. Apparently Mr. Duprey simply believes that he can predict the future. I’m sure he lives in a fancy castle in Virginia and he tends to his unicorns in his spare time.

    Now I have to go back to work, because I can’t predict the future.

  • Report this Comment On October 14, 2011, at 8:23 AM, TMFCop wrote:

    Just for the sake of full disclosure, I don't tend unicorns; my loyal faeries do. And my castle isn't all that fancy either.

    Rich

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