3 Stocks Near 52-Week Lows Worth Buying

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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.

Booming in Brazil
For those of you unable to vacation or unwilling to go near an airport this holiday season, sit back and relax, because we're going to take a look at three international companies deserving a second chance. First up on the list is Brazilian homebuilder Gafisa (NYSE: GFA  ) .

Unlike U.S.-equivalent homebuilders Toll Brothers (NYSE: TOL  ) and KB Home (NYSE: KBH  ) , which cater to middle- and upper-middle-income households, Gafisa has not had any trouble maintaining solid profitability. According to a report released over the weekend by Forbes, the Brazilian housing market is likely to experience another five years of boom before prices top out. This is good news for Gafisa and for investors potentially looking for an escape from the European turmoil. Although Gafisa's earnings estimates have fallen in recent months after three straight quarterly misses, I feel that at less than six times forward earnings and trading at less than half of book value, the stock makes an intriguing buy. Don't forget, Gafisa is also one of my "10 Mid Caps to Rule Them All" as well.

Two can play at this game
(NYSE: KYO  ) is one of the many high-profile Japanese names that have found the going difficult following the unfortunate earthquake in March. Supply-side issues and slowdowns in orders from some of its customers have curtailed sales and dragged down profit from the year-ago period. However, removed from this one-time event, things look to be getting better for Kyocera shareholders.

Kyocera boasts one of the healthiest balance sheets around, with $31 in net cash per share. Factoring in that the company has been profitable every year for the past decade yet trades at only 80% of book value and pays out a 2% dividend yield, and you get a recipe for a possibly undervalued stock. To top this off, Kyocera turned the tables on lawsuit-happy Eastman Kodak (NYSE: EK  ) last week and filed a patent infringement suit against Kodak regarding intellectual property used in its inkjet printer line. Investors appear to have written off Kyocera for the time being, but I don't see that as the right call at this price.

The stock of steel
I can't say that the prospects of many steel companies intrigue me at the moment. Economic uncertainty around the world and the possibility of a hard landing for China's economy has successfully spooked investors away from the sector. This could make it the perfect time to consider Russian steel and coal giant Mechel (NYSE: MTL  ) .

The future demand for steel is a very difficult concept to grasp -- both for me and for analysts, apparently. Over the past year, Mechel has launched past expectations by an average of 142%... and no, that's not a misprint. Mechel has been profitable in all but one year over the past decade, and book value has grown from less than $1 to more than $11 per share. The near-term outlook might not be as lustrous as investors would like, but it wouldn't take more than a quick polish to reveal that Mechel is a reasonable risk trading below book value.

Foolish roundup
You don't have to hop on a plane to be privy to some rosy international offers this week. All three are trading below book value and have a strong history of profitability. Because of that, I'm reaffirming my CAPScalls on Gafisa and Kyocera, and adding Mechel as an outperform. The question now is, would you?

In the meantime, consider adding these potential winners to your free and personalized watchlist and get your own personal copy of our free report, "The Motley Fool's Top Stocks for 2012," to see what our analysts have dubbed the "must-own" company for the new year.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. 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 that's always on the lookout for a good deal.

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  • Report this Comment On December 31, 2011, at 2:35 PM, JACKAL628 wrote:

    Its always much easier to follow what everyone says when forming an opinion. If you look at the facts about eastman kodak you will see a big time comeback coming. they will sell their patents of 1100 for apx 3 bill and they will have enough money for 2 years. they have invested money in inventory and will reep the rewards of that for the 4th quarter. because of GAAP, generally accepted accounting principles, they could not recognized revenue from sales in the 3rd Q. they will be recognized in 4q. The market will run up that stock on the first good thing that happens. It will go to about $4 per share when earnings for 4th Quarter come out just like in 2009 it tripled. They are getting rid of board members they dont need, the last one that went was 63 and worked for Obama and Clinton--What could she possibly know? and businesses and patents they dont need for their future. This will be a company soon with 3bill in cash and a name like kodak so they can start to regroup. You will be calling me a genius on the 23rd of January. I have 40,000 shares will be buying 1 year calls on Monday.

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Related Tickers

10/24/2016 10:41 AM
GFA $1.91 Up +0.05 +2.69%
Gafisa CAPS Rating: ****
KYO $49.23 Up +0.05 +0.10%
Kyocera CAPS Rating: ***
MTL $4.52 Up +0.70 +18.32%
Mechel OAO CAPS Rating: **
KBH $14.96 Up +0.22 +1.49%
KB Home CAPS Rating: **
KODK $15.24 Up +0.35 +2.35%
Eastman Kodak CAPS Rating: No stars
TOL $28.88 Up +0.35 +1.23%
Toll Brothers CAPS Rating: ***