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 and 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 a pair of 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

Central European Distribution (Nasdaq: CEDC  )

****

76%

North American Palladium (AMEX: PAL  )

****

67%

Source: Motley Fool CAPS.

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.

Bottoms up!
Shareholders of Polish vodka distributor Central European Distribution raised their glasses and toasted "Nostrovia!" as Russian Standard continues to up the ante -- and its stake -- in the business. A few months ago the Russian spirits distributor agreed to buy as much as a quarter of the company that caused a surge in its stock, and earlier this month it boosted its offer to buy 33% of the outstanding shares. Yet even as CED's stock gained 36% in the past two weeks alone on the basis of the offer, shares of the spirits distributor are still more than three-quarters below their 52-week high.

Although best-known for its vodkas, CED says whiskey is catching on in Poland, and it recently inked a separate agreement with Beam to distribute Jim Beam bourbon, Maker's Mark whiskey, and Sauza tequila. According to the distributor, the Polish whiskey has tripled in size over the past five years. Whether Poles will be dropping "Jager Bombs" remains to be seen, it does give CED an opportunity to expand the portfolio of offerings. In recent quarters, it's been losing ground to Diageo's (NYSE: DEO  ) mix of Smirnoff, Ketel One, and Ciroc vodkas.

With 96% of the more than 650 CAPS members rating Central European Distribution to outperform the broad market indexes, it's clear they think it will still be able to get its drink on. Add the spirits distributor to your watchlist to see if there will be further reason to raise your glass to Russian Standard's acquisitive ambitions.

Good doggie
Letting sleeping dogs lie is a good strategy for not getting bit, but when you let your Sleeping Giant gold mine sleep it signals big trouble. North American Palladium hoped the gold project would allow it to diversify its operations a bit so that reliance upon a still-sketchy auto industry would be lessened, but after two years of trying to make it economical let alone profitable yielded little results. NAP is mothballing the project, though the mill will continue to operate.

Recently, Stillwater Mining (NYSE: SWC  ) paid a rich premium to get at gold deposits owned by Peregrine Metals. Investors were none to pleased with the purchase price, though, and it remains to be seen if the copper assets will be worth the pretty penny paid.

North American Palladium still has the Vezza gold mine it bought from Agnico-Eagle Mines (NYSE: AEM  ) a few years back, and it expects to begin commercial production in the second quarter. With cash costs at $1,150 an ounce, however, it doesn't have as much of a cushion as those miners that sport cash costs in the hundreds of dollars.

An improving economy and more robust auto sales would certainly brighten the palladium miner's prospects, says CAPS member Dan22italy, and if it paid a dividend, it would be icing on the cake. As a shareholder myself, I'd be happy for any of those outcomes, but let us know on the North American Palladium CAPS page what you think the probability of that occurring is, and add the stock to the Fool's free portfolio tracker to be notified if it puts any other assets to sleep.

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. These companies may carry heightened risk both here and around the globe, but check out The Motley Fool's brand-new report, " The Tiny Gold Stock Digging Up Massive Profits." It highlights one little known company that is set to profit from scary inflation and gold prospects. You can get instant access to the name of this company by clicking here -- it's free.

Fool contributor Rich Duprey owns shares of North American Palladium, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Diageo. Motley Fool newsletter services have recommended buying shares of Beam and Diageo. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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 (6)

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 February 24, 2012, at 7:32 PM, rfaramir wrote:

    "So when our stocks go on sale, why do we bemoan their low prices?"

    I used to like this contrarian attitude, but not now, when I actually read the question. The answer is "Because they are OUR stocks". I love it when stocks I want to BUY are on sale, but I hate putting MY stocks on sale to induce others to buy them.

    It's a matter of perspective. If you've got lots of cash and are a potential buyer, then lower prices are good. If you're "all in" in the market, and just riding the waves, the down waves can be upsetting, since your only options are sell or hold.

    It's also a reminder to always have some cash on hand if you can. Buffett does, so he can have this attitude. You can too.

  • Report this Comment On February 24, 2012, at 7:54 PM, ETFsRule wrote:

    CEDC's stockholder equity is $700 million, but they have over $1 billion in "goodwill" on their balance sheet. That's a little too optimistic for me.

    I think TMF does their readers a disservice by not showing the goodwill section of the balance sheet.

    You can see it here, though:

    http://www.sec.gov/Archives/edgar/data/1046880/0001193125113...

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1779846, ~/Articles/ArticleHandler.aspx, 8/22/2014 4:45:04 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement