5 Stocks That May Be Bottoming Out

The market may be nearing all-time highs, but there are still too many companies staring at the floor instead of the ceiling these days.

There were 82 stocks on the New York Stock Exchange that hit fresh 52-week lows last week. Another 74 Nasdaq-listed companies hit new lows.

Bucking the bullish trend over the past year is well earned in most -- but not all -- cases.

Let me go over five names that clocked in with new lows last week that I think may be ready to turn the corner.

 Company

Last Week's Low

52-Week High

Renren (NYSE: RENN  )

$2.95

$7.87

BJ's Restaurants (NASDAQ: BJRI  )

$125.02

$304.79

Linn Energy (NASDAQ: LINE  )

$34.27

$42.57

Ebix (NASDAQ: EBIX  )

$12.08

$24.90

VMware (NYSE: VMW  )

$70.05

$118.79

Source: Yahoo! Finance.

Tennis balls bounce back, even though eggs don't
Let's start at the top with Renren.

China's leading social networking website operator doesn't get a lot of respect. The dot-com speedster went public at $14 two years ago, but it has been largely downhill from there.

Renren isn't profitable, and that's a problem. Analysts don't see it turning a profit until next year at the earliest. However, it's still hard to ignore growth. Wall Street sees revenue climbing 42% when Renren reports its quarterly results in two weeks, and those same pros see revenue accelerating to 43% in 2013.

China isn't going to shut down the Internet, but it will continue to reward local players that play by the rules. That's good news for Renren, which is already ahead of the curve by requiring real-name registrations.

BJ's Restaurants is one of the faster-growing eatery chains out there. You don't have too many restaurant chains growing at a double-digit clip, but that's because BJ's is still early in its expansion cycle.

If you've never been into a BJ's, it's a casual-dining experience. The specialties are deep-dish pizzas and brews, though my youngest son would argue that it's the funny face fries that come in the kids meals.

BJ's has been a disappointment lately. It failed to beat analyst estimates in each of last year's four quarters. Even now, few may argue that BJ's is cheap at 25 times this year's projected profitability. However, once investors get past the fears that casual dining will crumble in the wake of this year's expiration of the payroll tax rebate, BJ's will be appreciated again.

Linn Energy is one of the country's largest independent oil and natural gas development companies. Despite its healthy 7.5% yield, investors are getting nervous.

Linn Energy doesn't stand still. It made $2.9 billion in acquisitions last year, and it already topped that this young year with the $4.3 billion proposed purchase of Berry Petroleum. All of these deals make investors wonder if Linn is taking on too much at a time when it can barely cover its dividend.

However, Linn's opportunistic nibbling should pay off as the economy continues to improve and the consumption of oil and natural gas intensifies.

Ebix was rocked last week, but now it's fighting back.

Shares of Ebix rose 8% yesterday after it hosted a conference call that addressed many of the concerns raised last week when a bearish research report questioned the company's accounting practices.

Ebix provides enterprise solutions for the insurance industry. Its accounting may seem uncomfortably aggressive, but the company claims that it's doing everything by the book. The one thing about Ebix is that the stock was beaten down last week to the point where it's trading at an earnings multiple in the single digits even though it's growing faster than that.

Finally, we have VMware. I pointed out how BJ's failed to beat analyst profit estimates in any of last year's quarters, but VMware has actually beaten Wall Street's income targets every single period. You don't often find companies surpassing expectations only to hit new lows, but VMware's kryptonite is its valuation.

VMware has been a market darling until recently as the poster child for virtualization. VMware's growth has been explosive, but even now the stock is trading at a robust 23 times this year's expected earnings.

VMware didn't do itself any favors last month when it warned that it would only grow at a 15% clip -- with single-digit growth in licenses -- this year. However, as the stock reaches a more compelling valuation, it's hard to resist the virtualization darling.

Keep reaching for the stars
I know I won't be right on many of these. If the market weakens further, there's little to stop these companies from hitting even fresher 52-week lows down the line.

However, these five stocks are attractively priced right now. Somebody has to call bottom -- so why not me?

If you'd like to know more about the “Facebook of China,” The Motley Fool has published a premium report on Renren, giving you a rundown of its opportunities and threats. The premium research comes with a year's worth of updates. Just click here to get started.


Read/Post Comments (7) | Recommend This Article (2)

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  • Report this Comment On February 27, 2013, at 12:47 PM, rsinj wrote:

    "VMware didn't do itself any favors last month when it warned that it would only grow at a 15%"

    Yeah, that's really terrible in this economy where every technology company under the sun missed Q4 estimates and warned of things continuing awfully in 2013 with growth at most in the low single digits if not declining.

    Instead of being honest, they should have said 10% growth, the stock would have been trashed no differently than it has been, and then they would have real easy estimates to meet/beat throughout the year.

    Pathetic.

  • Report this Comment On February 27, 2013, at 8:18 PM, Seedye wrote:

    The BJRI 52 week low - high range is $29.00 - $51.23.

  • Report this Comment On February 28, 2013, at 10:17 PM, bclemmons7 wrote:

    VMware earnings call featured two new exec's for the first time. New CEO and new CFO, I sold all VMW before call, as I expected new management to under promise with a plan to over deliver.

    Fully expect VMW to continue to dominate virtualization adding networking virtualization dominance like they have done in compute.

    Disclosure: Buying Long Calls on VMW now.

  • Report this Comment On March 01, 2013, at 2:54 PM, AaronRogers wrote:

    I've been a fan of EBIX for a long time as one can see on the fool website and my picks. None the less, I would wait to pull a trigger for a long term trade for a bit. 2 court cases and the latest Alpha story makes one believe a Wells Notice at some point by the SEC is a little over due which should be quite a blow to the stock price. To be honest I think an SEC investigation might be a boon. Should EBIX be cleared much of the noise will be silenced. However, where there is smoke....

    If no notice is filed before earnings I do recomend and I most likely will buy the March call options for an extremely aggressive trade (they will expire the next day). Extremely short term and extremely risky as it will most likely be an all or nothing trade. None the less, EBIX is short term at best at this juncture as price swings are wild and clarity is not exactly in the books. Of course EBIX said the books are good. Enron, CSKI, LPH, and hech even lehman said their books were clean to.

  • Report this Comment On March 01, 2013, at 3:01 PM, EnigmaDude wrote:

    There is no reason for the SEC to investigate EBIX. Lawsuits often follow big drops in a stocks value. Just because one person (who has written 2 different blogs using different pseudonyms) managed to bring up what may be a non-issue does not mean there is anything inappropriate going on. Of course that is always a possibility but nothing so far indicates any actual wrongdoing by Ebix.

  • Report this Comment On March 01, 2013, at 3:32 PM, AaronRogers wrote:

    Actually, the law suits I'm refferring to have nothing to do with the share price drops. Those may be new but nothing filed yet. The lawsuits are by prior exec's of acquired companies. They claim the receivables are improper. They claim they are owed money for sales of their products they did not receive credit for. They claim the books are inaccurate at EBIX. They claim many of the same claims by the two other bloggers on Alpha. Except each blogger and lawsuit cover different areas of the same claim of fraud and wrong doing. The courts in Atlanta concurred that EBIX must go to court and prove the validity of its accounting. EBIX tried to have the case thrown out and when you read the judgement its quite obvious the judge has serious concerns as well. That's why I believe these latest accusations may earn a noice from the SEC. Multiple parties with multiple examples all under the SEC watch of accounting fraud.

  • Report this Comment On March 02, 2013, at 2:16 PM, eitanshin wrote:

    RENREN price is a joke!!!!

    like nokia was 1.80 Bac was 5$ bbry was 7 atc.....it will be double in a month....the questions is just WHEN.....maybw when everybody will get Desperate....gl to you allll

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