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.
I'm ready to friend this company
After my spiel last week calling for investors to give Facebook
What Facebook will not do is ever live up to the hype that surrounded the stock. It's no longer a fresh idea, and its platform still needs a lot of tweaking with regard to how it monetizes its 102 million mobile-only users. In spite of Facebook's numerous shortcomings, ranging from its botched IPO all the way through its first public earnings report, there's really a lot to like with the stock more than 50% off its highs.
Facebook's monthly active users jumped 29% year-over-year to 955 million. It also recently announced a new and improved app for Apple's
Keep it rollin'
It's been a rough couple of years for aluminum manufacturers. Today, I want to take a look at Noranda Aluminum
Like its largest rival, Alcoa, Noranda is highly dependent on the price of aluminum to drive its bottom-line results. Unlike Alcoa, since Noranda is focused on selling many of its products within the U.S., it gets to charge a premium of a few cents per pound on its aluminum products to its customers. That differentiation is one reason Noranda is able to remain profitable even with aluminum prices falling more than 20% over last year.
Also, while Noranda relies on automotive and the housing sector for a good portion of its sales (and please note: both have been relatively strong of late), it provides billets that are used in HVAC units and recreational vehicles. HVAC sales should strengthen as housing recovers, and rec vehicles have been on fire lately (see Polaris Industries or Arctic Cat for further evidence of this).
Finally, Noranda controls its entire production process -- from raw materials to flat-rolled finished products -- which allows it to keep its expenses under control. Unless aluminum prices dip another 20% or more, Noranda should be good to go.
You got BlackBerried!
According to the Strategy Analytics Handset Component Technologies service report (what a mouthful!), Marvell Technologies
Despite the consistent revenue shortfalls in recent quarters because of RIM, there are still reasons to believe Marvell will be a long-term successor, if not a potential buyout target.
To begin with, Marvell has strong tie-ins with China Mobile. Smartphone growth is fairly tepid this year, but a burgeoning middle class in China should drive an expansion of China Mobile and Marvell's current partnership. A shrinking average selling price of smartphones should also make them more accessible to the public and give Marvell more potential unit sales.
Another growth opportunity for Marvell is solid-state drives. Marvell and SanDisk
Foolish roundup
This week's theme is to give the product proper time to grow. Marvell and Facebook offer viable technologies and platforms that simply aren't being given a chance to develop. Similarly, Noranda has long-term appeal, but investors can't seem to see past a recent dive in aluminum prices.
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.
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