There's a BOGO Sale on These Top Stocks

The world's top value investors love it when their best stocks ideas are selling at bargain-basement prices. For those rarified investors, companies offering fire-sale prices become no-brainer buys. So regular investors like you and me would do well to emulate the masters and look at companies offering a "buy one-get one" sale on their stocks -- those that are trading half or more off their recent highs.

Naturally, you'll want to do more due diligence before buying. Low-priced appliances in the dent-and-ding section of your home-remodeling superstore might be there for more reasons than just a few scratches on the surface: Real trouble might be lurking below.

A minus for Enerplus
I noted a couple of weeks ago that Canadian oil and gas outfit Enerplus (NYSE: ERF  ) looked destined to fall further because the boom in natural gas drilling had yet to be contained. While prices have finally risen above $2 per million Btus and rig counts are down 32% from the year-ago figure, consumption continued to fall -- down 27% in the residential market and almost 3% in the industrial sector.

What Enerplus investors are undoubtedly looking at, though, is its 13.4% dividend yield, but in today's market I'd say it's unsustainable and is behind the company's recent decision to offer optional dividend payments in additional shares as opposed to cash. With fund flows virtually unchanged, the company has identified a sizable amount of assets that it could sell to raise cash, something other natural gas plays like SandRidge Energy (NYSE: SD  ) began in earnest last year. Fellow Canadian EnCana (NYSE: ECA  ) -- North America's second-largest natural gas producer -- has also taken to selling assets in an effort to shield its balance sheet from further decreases in natural gas prices.

This highlights the difficult position even well-financed companies are in today. Enerplus is a struggling firm and I've rated it on CAPS to underperform the market averages. CAPS member cdors also believes a dividend cut is in order, and that when that happens the stock will fall.

Enerplus shares are down 20% in the last month and 51% from their annual high. Add the natural gas specialist to your watchlist and let us know on the Enerplus CAPS page if you think its dividend is in danger.

MAKO needs more
The market has surgically reduced the stock of robotics maker MAKO Surgical (Nasdaq: MAKO  ) after first-quarter results were well below expectations, causing guidance to remain unchanged for the full year.

In last year's fourth quarter, MAKO had performed well above plan, with system sales coming in above even revised guidance. That allowed it to forecast that 2012 would see anywhere from 56 to 62 system placements, but with just six RIO systems sold worldwide in the first quarter, management had to scale back its placement estimates to 52 to 58 systems. Now that's not a horrible range, considering that at the upper end it's still within the range originally set, and coupled with normal first-quarter seasonality, I continue to maintain it's a hiccup that can be overcome.

Compare that to Hansen Medical (Nasdaq: HNSN  ) , which is having an even more difficult time getting placements for its Sensei catheter systems. It shipped just two units in the first quarter and saw the number of procedures drop 5% year over year. MAKO had a 76% increase in the number of MAKOplasties performed last year.

I've rated MAKO to outperform because this should be a level it bounces back from. In that regard, I'm joined by CAPS member arrowboy, who finds the surgical robotics specialist a "screaming buy" at this price: "Not just that it's a 52 week low, but the Q1 over-reaction by Mr. Market seems to forget that Q1's have historical been a major pull-back quarter."

Tell me on the MAKO Surgical CAPS page or the comments section below if you think it can reconstruct its share price, then follow its progress by adding the ticker to the Fool's free portfolio tracker.

Have half a mind
You can tell us whether these stocks are twice as good at half the price, but if you're looking for dividend stocks that pay you to wait for their price to recover, check out the two fistfuls of companies Motley Fools analysts have found that offer long-term protection. Get the report "Secure Your Future With 9 Rock-Solid Dividend Stocks" absolutely free to see which ones the Fool says to buy now.

Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of MAKO Surgical. Motley Fool newsletter services have recommended buying shares of MAKO Surgical. The Motley Fool has a disclosure policy.
We Fools may not all hold the same opinions, but we all believe that
considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (1) | 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 May 16, 2012, at 6:08 PM, 1caflash wrote:

    Rich, I'm glad I felt the vibes this year about ERF. I paid attention to how TMF and other internet sites felt, and I sold all my Enerplus shares at about $22.77. Keep up the good work.

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: 1888835, ~/Articles/ArticleHandler.aspx, 10/25/2014 8:47:49 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