3 Stocks Near 52-Week Lows Worth Buying

Just as we examine companies each week that may be rising past their fair value, we can also find companies potentially trading at bargain prices. 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 when the market reacts to the upside.

Here's a look at three fallen angels trading near their 52-week lows that could be worth buying.

Guilt by association
In the cartoons, characters usually recover after having an anvil dropped on their heads. That isn't the case with networking company Riverbed Technology (Nasdaq: RVBD  ) .

Riverbed has been in a steady decline right along with network solutions provider Acme Packet (Nasdaq: APKT  ) . With Acme warning that it was experiencing continued order slowness in its North American operations last week, investors would rather unplug from the entire sector than hang around to see what happens next. I, however, don't feel that would be the best approach with Riverbed.

Riverbed's recently launched Steelhead wide-access network optimization software, which allows workers to connect to data from both LANs and WANs, is going to be a major growth driver over the coming quarters. Riverbed has partnerships in place with U.S. telecom giants AT&T and Verizon -- both companies which have contributed to the spending slowdown -- but I feel its greatest growth opportunity lies with small and mid-tier businesses that are still in the process of rapidly expanding their infrastructure. As a play on bandwidth expansion and cloud-computing growth, Riverbed gets my vote of approval.

Get rich on Richmont
It's been far too long since I've highlighted a junior miner, so let's rectify that situation right now by looking more closely at Canadian gold miner Richmont Mines (NYSE: RIC  ) .

All miners, including Richmont, have been plagued recently by weaker gold prices and higher operating costs associated with mine maintenance and build-out. For Richmont, the negativity has been compounded by a reduction in proven and probable reserve estimates at its Francoeur mine to 77,580 ounces from its previous expectations of nearly 137,000 ounces. Still, there are plenty of valuable assets left beyond Francoeur (which will still be mined, although it will offer a shorter life span than originally anticipated).

Richmont's two primary mines -- the Beaufor Mine in Quebec and the Island Gold Mine in Ontario -- have kept and will continue to keep the company profitable. Ore grades are consistently around 7 grams per tonne, which has led to steady profitability for the company through much of the past decade. Between Beaufor's 69,000 ounces of proven and probable gold reserves, Island Gold Mines' 172,000, and Francoeur's nearly 78,000, Richmont shareholders need not worry about profitability for quite some time. These estimates also don't take into account measurable or inferred resources, either, so they are conservative at best.

At less than four times forward earnings, Richmont could be the spark your portfolio is looking for.

Better safe than sorry
A malware scare over the weekend affecting hundreds of thousands of computers worldwide served as a stark reminder that the Internet security sector is big enough for more than one company.

If you recall, AVG Technologies (NYSE: AVG  ) has been my preferred choice in the sector due to its low customer acquisition costs and McAfee's miscues, which resulted in a 27.5% decline in revenue last year. However, today I want to also add Norton Antivirus maker Symantec (Nasdaq: SYMC  ) to that list of buys.

There are reasons for short-sellers to be skeptical, including Symantec lowering its earnings guidance on lower enterprise demand for its software and the company adding to its debt load by offering $1 billion in notes in June. But, unlike Intel's McAfee, Symantec was able to grow its market share by 17% in the consumer and enterprise security segment in 2011. The demand for security is only growing, and Symantec's original equipment deals with large manufacturers should provide a steady base of cash flow for the company to build upon. Symantec looks like quite the bargain at less than eight times forward earnings.

Foolish roundup
Just because a company takes a couple of blows and perhaps even gets knocked down doesn't necessarily mean it's out for the 10-count. Steady growth demand in networking and security bode well for Riverbed and Symantec, while solid gold reserves should mean good things for Richmont going forward.

I'm so confident that 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 special report: "The Motley Fool's Top Stock for 2012." Find out which company our chief investment officer has dubbed the "Costco of Latin America." Best of all, this report is completely free, so don't miss out!

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.

The Motley Fool owns shares of Riverbed Technology, Intel, and Costco. Motley Fool newsletter services have recommended buying shares of Riverbed Technology, Acme Packet, Intel, and Costco, as well as creating a synthetic long position in Riverbed Technology. 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.


Read/Post Comments (1) | Recommend This Article (8)

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 July 10, 2012, at 11:55 AM, ravens9111 wrote:

    RVBD has too much exposure to Europe. RVBD was a hot stock growing revenues, but that trend will change. Their P/E is still sky high over 40. If earnings actually decline, it will go much lower in my opinion.

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: 1938323, ~/Articles/ArticleHandler.aspx, 11/28/2014 7:32:33 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