5 Stocks That May Be Bottoming Out

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

There were 93 stocks on the New York Stock Exchange that hit fresh 52-week lows last week. Another 52 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

Intuitive Surgical (NASDAQ: ISRG  )

$455.18

$594.89

Millennial Media (NYSE: MM  )

$7.89

$27.90

Baidu (NASDAQ: BIDU  )

$84.88

$154.15

Boingo Wireless (NASDAQ: WIFI  )

$5.35

$13.25

EZchip Semiconductor (NASDAQ: EZCH  )

$21.80

$46.79

Source: Yahoo! Finance.

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

The company behind the da Vinci robotic arm was trading within 2% of its all-time high just last month, and now it's smacking a 52-week low.

The turning point came late last month, when the FDA launched a safety probe by surveying surgeons at some hospitals using da Vinci machines. There were an unusually high number of adverse incident reports at key hospitals and the regulatory agency wanted to take a closer look.

The investigation is ongoing, but investors don't like uncertainty.

Intuitive Surgical has been a market darling, and the platform using a surgeon-guided robotic arm for surgical incisions on certain procedures has historically been seen as a win-win-win scenario. Surgeons don't suffer as much fatigue. Patient recovery times are quicker. Hospitals can perform more surgeries in any given day. The only thing holding Intuitive Surgical from being in more hospitals was the high cost of the machines, but now there are real concerns about the platform itself until this cloud passes.

The dark cloud will pass.

Millennial Media has fallen ever harder.

The mobile advertising speedster went public at $13 last March, traded as high as $27.90 on its first day, and now has fallen all the way down to the single digits.

Millennial Media is still growing, serving up display advertising in many of the most popular apps. Millennial is the largest player in mobile advertising that isn't tethered to a single mobile operating system, and those platform-agnostic ways are compelling to developers.

Revenue climbed 71% last year, and Millennial Media's guidance calls for a still impressive 52% to 58% top-line pop this year. Red ink used to be a problem, but the company is coming off of back-to-back profitable quarters.

Baidu is China's leading search engine, commanding roughly two thirds of the search queries in China.

Investors have been hesitant to pile into Chinese Internet stocks, but that's a big mistake when it comes to Baidu. The stock has never been this cheap. The dot-com speedster is trading for less than 13 times next year's projected earnings, but it's growing a lot faster than that.

There is one upstart challenging its market share, and China's not exactly known for its open market and open Internet ways, but Baidu's too tempting to ignore here.

Boingo Wireless is another busted IPO. The public Wi-Fi provider went public two years ago. It wasn't as hot an IPO as Millennial Media. In fact, Boingo has never traded above its IPO price tag of $13.50 a share. However, things have gone from bad to worse at Boingo.

After coming through with consistently profitable quarters in its brief public tenure, analysts see Boingo posting back-to-back quarterly deficits on declining revenue to kick off the first half of this year.

It's OK. The company with a whopping 600,000 hotspots is approaching 2013 as a year of transformation. Boingo sees increased traffic as a result of smartphone users avoiding the now limited wireless carrier data plans, and it's investing in expanding its network capacity.

The numbers don't look pretty right now, but the picture should look better later this year as Boingo returns to profitability.

Finally, we have EZchip Semiconductor. It's also in a year of transition. Orders from the company that once was its largest customer have fallen sharply, but that has been more than offset by a healthy spike in orders from the world's leading networking hardware company.

EZchip seems to be doing right by most accounts. It posted better-than-expected earnings every single quarter last year, and analysts see sharp double-digit growth in revenue in net income in the near future. The shares are simply out of favor. EZchip's fundamentals, thankfully, are not out of favor.

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?

The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.


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  • Report this Comment On March 19, 2013, at 12:34 PM, ChanHol wrote:

    There is absolutely no indication that MM is bottoming. In fact, the rate of fall is increasing--lost look at the chart, it's as clear as day. As, too, is the Fool's financial position.

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