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.
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This weekly melting pot of ideas is usually thick on value with less emphasis on double-digit growth. This first pick, however, will be a complete deviation from that mode of thinking.
Since reporting its first quarterly profit in its young history, Zipcar
This won't be Zipcar's only quarterly profit. In fact, I don't think the company is going to look back. The service, renting cars at an hourly rate, makes an insane amount of sense for those of us who live in heavily populated areas and don't have either the budget to rent out a parking space or the patience to find a parking spot. It's no wonder Zipcar's revenue spiked by 24% while membership grew 25%. The most important metric, usage revenue per vehicle per day also rose 8%. As far as I'm concerned, this growth is only going to accelerate in the coming years.
Congressional stamp of disapproval
If you're a company in the defense sector, you've probably bitten your nails down to stubs as Congress continues to sit on its hands in figuring out where to cut the federal budget. With hefty cuts likely in the defense sector, companies that rely on government contracts like GeoEye
Although GeoEye gets some revenue from tech heavyweights Google
Now it's a party
Who says three's a crowd? I've made it pretty apparent that I'm intrigued by the value I'm seeing in the communications equipment sector, having made my case for Cisco Systems
With Arris Group, I'm going back to the basics of what makes this series so successful -- cash-rich companies with broad-based applications that have hit a rough patch in their growth. Arris's balance sheet features a healthy $368 million in net cash (more than $3 per share) and it's trading at just 1.2 times book value. When I see cash-rich companies like Arris down where they're at now, my mind starts thinking "potential buyout candidate. " As long as Arris can remain healthfully profitable, it's just a matter of time before it begins to reward shareholders by moving higher.
Just so I don't seem as predictable, I threw in some high-growth prospects this week along with the usually smattering of deep-discount value plays. All three represent intriguing plays for the future and I'm willing to back that up by betting my CAPS points on them.
Would you make the same call? Share your thoughts on these stocks in the comments section below and consider adding Zipcar, GeoEye, and Arris Group to your free and personalized watchlist to keep up on the latest news with each company.