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.
Just playing around
The holiday season was not kind to toymakers. Recently, JAKKS Pacific (Nasdaq: JAKK ) , the company that licenses toys under the Pokemon brand name, warned investors that its fourth-quarter sales would miss its previous guidance by a mile. Likewise, Mattel (Nasdaq: MAT ) , even with its forecast of 7% sales growth and a 2%-4% jump in profits, came in with preliminary guidance below the Street's expectations. It really wasn't a surprise then when Hasbro's (Nasdaq: HAS ) preliminary guidance also failed to impress.
Hasbro expects revenue in the fourth quarter to rise by 4% to $1.33 billion, but that fell short of the $1.39 billion consensus figure. Still, this isn't the time to abandon this dividend diva. Obviously, the toy sector will have its ups and downs, but Hasbro has grown its EPS in every year since 2002. More impressively, Hasbro's quarterly dividend has spiked tenfold from just $0.03 in January 2004 to $0.30 right now. Now yielding 3.7%, it remains a retail name that should remain on many long-term investors' buy lists.
Foreign telecoms for the win
Three weeks ago, I recommended South Korea's dominant mobile carrier SK Telecom as a great way you can get into a high-yielding foreign telecom at a discounted price. This week I'm going right back to Korea and recommending its rival, KT (NYSE: KT ) .
Just like SK Telecom, KT has been growing at a slow and steady pace over the past decade, with sales growth being interrupted only in 2003. What's really compelling about KT -- and what a lot of investors don't realize because websites like Yahoo! Finance list the company's dividend payout as "N/A" -- is that KT's dividend is an absurdly delectable 7.2%! That's markedly higher than SK Telecom's dividend, and it beats the 2% average yield of the S&P 500 into a pulp. Valued at just 74% of its book value and seven times forward earnings, KT's cheap. Take advantage of it while you can!
Even though I'm all aboard the Bank of America bandwagon with my ticket in hand, I still have to stand by my assertion in September that National Western Life Insurance (Nasdaq: NWLI ) is the most undervalued financial stock, period!
The life insurance company, which has been as consistently profitable as the previous two companies mentioned this week, trades at just seven times trailing-12-month earnings and a mere 39% of its book value. It's really hard to figure out why National Western gets such a bad rap because its insurance business grew 9% for the third quarter and net investment income, minus index options, rose 12%. This is a conservatively run, well-managed, investment portfolio that is adding to equity to shareholders each and every quarter. If there's one knock against the company, it's the pittance of a dividend you'll receive -- just $0.36 annually (0.3%). Despite the small dividend, this has deep value play potential written all over it.
This week, we looked at three companies which often fly under investors' radars but have been solidly profitable and, in two out of the three cases, offer incredible dividends. Don't let consistent performance slip by your radar! I'm so confident these three names will bounce off their lows that I'm going to make a CAPScall of outperform on each one.
In the meantime, consider adding these potential winners to your free and personalized watchlist and get your own personal copy of our latest special report, "The Motley Fool's Top Stock for 2012," and see what our chief investment officer has dubbed the "Costco of Latin America." Best of all, this report is completely free, so don't miss out!
- Add Hasbro to your watchlist.
- Add KT to your watchlist.
- Add National Western Life Insurance to your watchlist.