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.

A shiny opportunity
One aspect of purchasing companies at or near 52-week lows is that you sometimes have to take chances -- consider this one of those moments. This week we'll start by examining African, Canadian, and South American gold miner IAMGOLD (NYSE: IAG  ) .

Gold miners have vastly underperformed relative to the price of spot gold for the better part of two years now. IAMGOLD, to add to that, has underperformed even among its peers. When I examined the 12 largest gold miners on a statistical basis, it generally came in among the middle of the pack or near the bottom of all statistical categories. Things worsened last month when it upped its production cost forecast 3% to $716 per ounce in 2013 and reported a lower-than-expected 830,000 ounces for the year. Yet I'm going out on a limb and suggesting that now is the time to dig into IAMGOLD.

The most exciting aspect of the company is its Cote Project, located in Ontario, and acquired when it purchased Trelawney Mining and Exploration last year. Although ore grades aren't exactly breathtaking (just 0.84 to 0.88 g/t), indicated resource totals have risen from just 0.93 million indicated ounces of gold when IAMGOLD announced its purchase of Trelawney to 3.56 million indicated ounces as of October. Furthermore, IAMGOLD's management projects that its gold output will grow by about 80% between now and 2017 to 1.4 million-1.6 million ounces annually. This means that at less than eight times forward earnings, you could be getting IAMGOLD on the cheap at its current price.

Gushing with opportunity
Sometimes it feels like a company just can't catch a break... at least if that company is oil and gas exploration and production company Stone Energy (NYSE: SGY  ) . Stone, which operates wells in the Gulf of Mexico, or GOM, and onshore in the U.S., has struggled under the higher costs associated with operating platforms offshore as well as lower price realizations for its natural gas production. However, now could represent the perfect time to turn the market's pessimism to your advantage.

According to Stone's latest update in January, 51% of its estimated proved reserves are natural gas, 14% natural gas liquids, and the remaining 35% oil. If you think about it, this is a fantastic distribution because half of its reserves are in liquids, which remain in high demand and have far less price volatility than natural gas. But from the perspective of natural gas, higher demand stemming from more electric utilities switching to gas from coal and President Obama's pledge to move the U.S. toward energy independence should buoy gas prices moving forward.

Also, even with the unexpected costs of the GOM driving up costs, Stone is allocating about 36% of its capital expenditures in 2013 toward onshore drilling. Most of this will be devoted to the Marcellus shale region, where higher operating efficiencies are spurring the development of more wells; however, the really exciting opportunity may lie with the small operating budget tied to its joint venture projects. These include the company's working interest in the Eagle Ford shale, as well as its joint venture in the Bakken with Newfield Exploration (NYSE: NFX  ) . Newfield, which moved its operations from the GOM onshore over the course of a few years, purchased Stone Energy's Rocky Mountain assets in 2007, so the two have a relationship that goes quite a ways back. Don't be shocked if Newfield makes an offer for Stone's working interest in the Bakken, either.

All told, at just 10 times forward earnings, Stone could be quite the bargain.

"For sale" sign in the front yard
Let me be clear: Just because I'm not a fan of activist investor Carl Icahn doesn't mean I don't take close notice of his actions. He has successfully spearheaded buyouts and asset sales at what he deems undervalued companies on multiple occasions that turned out positive for shareholders. In November, Icahn disclosed a 13% stake in Enzon Pharmaceuticals (NASDAQ: ENZN  ) , leading many to believe a sale or partial sale could be on the horizon. Following the company's $2 special dividend, I agree that now could be the time to pounce on Enzon.

Enzon, which recently retained Lazard to help explore strategic alternatives, makes the majority of its royalty revenue from Merck's (NYSE: MRK  ) Peg-Intron, for the treatment of hepatitis C. True, a new class of hepatitis C drugs could cut into some of Merck's revenue, and thus Enzon's royalty revenue, but Peg-Intron's patent isn't slated to expire for two more years. With much of Enzon's drug development process largely on hold, Enzon should bring in around $0.50 in EPS annually until 2015.

Enzon's pipeline, while still in early and mid stages, has shown promise. EZN-2208, as my Foolish colleague David Williamson has noted, is its most promising pipeline candidate for metastatic breast cancer and colorectal cancer. Given the desperation of big biotechs looking for growth opportunities due to the unforgiving patent cliff, I could see a 20% to 30% premium being paid for Enzon as a whole.

Foolish roundup
This week is all about going out on a limb. Warren Buffett has always said to "be greedy when others are fearful," and the fear in the above three stocks appears to be peaking, making for an excellent buying opportunity, in my opinion.

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.

Can Merck beat the patent cliff?
This titan of the pharmaceutical industry stumbled into 2013 and continues to battle patent expirations and pipeline problems. Is Merck still a solid dividend play, or should investors be looking elsewhere? In a new premium research report on Merck, The Fool tackles all of the company's moving parts, its major market opportunities, and reasons to both buy and sell. To find out more -- and get a full year of free updates -- click here to claim your copy today.


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