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The world's top value investors love it when their best stock ideas are selling at bargain-basement prices. For those 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.

Less than a year ago, these companies were trading for at least twice the value they currently do. While you'll naturally want to do more due diligence before buying, this might be an opportunity to pick up some quality companies at a severe discount. The market is down only 5% from its 52-week highs, so make sure there's nothing seriously wrong with these stocks before you plug them into your portfolio.

Falling off a cliff
When you look at the operations of coal miner Cliffs Natural Resources (NYSE: CLF  ) , you quickly see there's nothing wrong with the company, per se. While 7% first-quarter revenue growth missed analyst expectations, it was still predicated on increased sales volumes across all of its segments. And though profits of $2.63 per share were significantly below last year's $3.11 effort, the figure blew away consensus estimates of just $1.12 per share. No, Cliffs' operations are doing just fine.

What's not doing so well is that it operates in an industry caught in the crosshairs of an administration intent on eliminating "dirty" fuel from the environment. Strict new air-pollutant regulations from the EPA are encouraging utilities to convert from coal to natural gas, and with prices at historic lows, there's little incentive for them to build coal-fired plants even as coal's own price has plummeted. American Electric Power (NYSE: AEP  ) , which initially was going to install expensive scrubbers in its Big Sandy coal-fired plant in Kentucky, is now mulling whether to shut it down instead.

Cliffs just reduced its 2012 thermal coal output projections from the Toney Fork No. 2 mine in West Virginia by 27%, following Alpha Natural Resources' (NYSE: ANR  ) decision to cut its thermal coal production and close four mines in Kentucky because of plummeting demand. Patriot Coal (NYSE: PCX  ) is also reducing production.

So what investors are left with is a coal miner that's been making the best of a bad situation, but it's hard to recommend the stock as an investment, because the situation won't change unless there's a new regime in Washington that isn't gunning for the industry's demise. Coupled with a slowing economy and a harder-than-expected economic landing in China (which just so happens to be the world's biggest consumer of coal), the future looks rather bleak.

Investors such as CAPS member 2trpop rightly have the idea you need to look at the long term when thinking about whether to back Cliffs. Because it's a sound business, I'd normally agree to rating the miner to outperform the markets on CAPS, but until there's a more supportive regulatory structure in place, I think it still has farther to fall. Let me know in the comments section below or on the Cliffs Natural Resources CAPS page if you agree it takes a long time to turn a big ship around, and then add the stock to the Fool's free stock tracking service to see whether it can make lemonade from the batch of lemons it's been handed.

A difficult sequence of events
Although I thought the window of opportunity had partially closed for Sequenom (Nasdaq: SQNM  ) and its Down syndrome test, I still thought it could be a big winner because having put its troubles behind it and getting the test on the market, there would be a big uptake in adoption of the less invasive and less risky testing procedure. And as early results showed, this was proving to be the case.

But the bottom seems to have dropped out on Sequenom. The competitors I feared grabbing a big share of the market are now here, with Ariosa Diagnostics landing a big contract with LabCorp to make its Harmony test widely available, while at the same time, Coventry Health agreed to pay for Sequenom's MaterniT21 and then two weeks later inexplicably decided against it.

Shares of the biotech, which had been making a comeback, plunged once again. Despite the setbacks, I'm still hopeful Sequenom will be able to outpace the broad market indexes. Analysts contend that it ought to be able to ink new deals with two of the six largest insurers -- Coventry, in fact, is one of the smallest -- and sales of the MaterniT21 test continue to grow apace. At the end of the first quarter, Sequenom reported that more than 4,900 tests were accessioned, which equals an annual rate of 30,000. However, the biotech said that by the end of April, or just one month into the second quarter, that annualized rate had leapt to 45,000 and it was raising its internal estimates for 2012 to 40,000 accessions, up from 25,000.

The window may have closed some, but it's in no way shut, as CAPS member pphillips8 points out: "as run rates grow at an exponential rate, cash generated will put too much pressure on those shorting the stock until they capitulate." I'll also be maintaining my outperform rating on CAPS.

But tell me on the Sequenom CAPS page or the comments box below whether you think it can run ahead of the doomsayers, and then follow its progress by adding the ticker to your Watchlist.

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 The 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. Check out his holdings and a short bioMotley Fool newsletter services have recommended buying shares of LabCorp and Coventry Health Care. The Motley Fool has a disclosure policy. We Fools don't 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 (3)

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 June 20, 2012, at 7:58 AM, megastockmaster wrote:

    SQNM has even more possibility than you mentioned.

    Coventry was a PR blunder, not a rejection of SQNM. Check it out -- you need to have this info under your belt to write an informed long thesis.

    In addition, I don't know how you can write a long thesis for SQNM without mentioning the court case which has a hearing at the end of the month. If they get an injunction based on their patent, Ariosa / Labcorp will be out of the picture. From my biased eyes, it will be difficult for a judge not to issue an injunction.

    Worst case is they don't get the injunction and have some competition [which is already more than baked into the share price]. Ariosa's test, looked at scientifically, appears to have much less reliability than Sequenom's and, despite its loss leader cost which is most likely built to lose money in a desperate play to gain market share, will present doctor's with a strange choice: amnio -- traditional, invasive, dangerous; Harmony -- cheap knock off which might infringe on patents and, apparently, cannot compete in scientific studies with Sequenom[SQNM]'s test.

    Another thing which a long thesis should include is SQNM's application for FDA approval which should permit them to market their test to the public.

    I also think SQNM is looking for approval to sell their test to non-high risk groups [currently these tests are for pregancies which have a high risk]. If they get that, then their market opens up tremendously.

    I appreciate your long thesis, being a shareholder myself, but I just don't see how you could have missed these important upside possibilties.

    The competition is baked into the price; I think these things present potential for huge upside surprises in share price.

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