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.

Holy yield, Batman!
I've been waiting for a moderate pullback in mortgage-REIT American Capital Agency (NASDAQ: AGNC  ) for better than a year, and last week we finally got it!

American Capital Agency buys agency- (i.e., U.S. government-) backed mortgage-backed securities and makes money by levering its portfolio as much as is reasonable to take advantage of the net interest margin between what it borrows at and what it lends at. In recent months, these interest spreads for the two largest agency-backed mREITs, Annaly Capital Management (NYSE: NLY  ) and American Capital, have been shrinking due to the Fed's ongoing bond-buying activity, which is removing many MBS' buying opportunities from the marketplace. In addition, as my Foolish colleague David Hanson pointed out last week, American Capital reported a comprehensive loss of $557 million, meaning its market securities lost value in the first quarter. In short, mREITs aren't without their fair share of risks.

While that certainly isn't positive news, I'd say investors are casting doubt on mREITs like Annaly and American Capital at precisely the time when they're about the hit another sweet spot of growth. As the Fed has hinted, when it begins to wind down its bond-buying program, more lucrative MBS-purchasing opportunities will open up, which should help expand net interest margin. In addition, a very accommodative Fed should keep lending rates near or at record lows through 2015. This high level of visibility will work in favor of Annaly and American Captial, which have levered their portfolios to take advantage of this upcoming "sweet spot."

While I'm certain the company's 16% yield won't last forever, I'd be shocked to see it fall below 10% in the next three years.

Big data, big opportunity
Much as I have with American Capital Agency, I've been waiting for data analysis software provider TIBCO Software (NASDAQ: TIBX  ) to pull back for a while -- and now looks like the perfect opportunity to pounce.

In TIBCO's most recent quarter it delivered 5% revenue growth to $238 million as net income fell 54% from the year-ago period, missing the Street's estimates. This wasn't much different from Oracle (NYSE: ORCL  ) , which sank after it reported its results in March, also failing to meet expectations. For Oracle, hardware revenue sank (which is really nothing new), but software license revenue, which comprises cloud computing, also fell by 2% in a surprise drop to investors.

While not encouraging, the weakness in sales and profit for both companies appears to be based on the transition to cloud-based licensing platforms. Instead of locking in one-time deals and boosting earnings now, companies like TIBCO and Oracle are trying to lock up recurring revenue streams. Make no mistake about it, big data spending is going to be gigantic by the end of the decade and TIBCO data analysis tools look poised to capitalize. With a handful of reasons to like the company and an incredible CEO at the helm in Vivek Ranadive, I see no reason why I wouldn't make a CAPScall of outperform here.

A simple numbers game
For hospital operators like Select Medical (NYSE: SEM  ) , the future is just a numbers game as long as the Patient Protection and Affordable Care Act gets implemented on Jan. 1, 2014.

I'll admit that Select Medical's first-quarter results probably made shareholders feel pretty ill last week. The effect of the sequester and weak Medicare reimbursement raises caused the company to lower its full-year outlook to a range of just $0.87-$0.94 from the $1.01 that Wall Street was expecting. But the catalysts here could be huge.

The big one, of course, is that the individual mandate will require individuals to carry health insurance by law. With fewer uninsured people under its care, Select Medical's doubtful account provision would be expected to decline by a sizable amount. There's also the fact that baby boomers are aging, which is going to introduce a huge influx of people needing specialized care within the coming decades -- more so than we're seeing now.

On a valuation basis, Select Medical is trading at just 8.5 times the midpoint of this year's forecast and less than eight times next year's. That seems like an incredibly cheap price to pay for what seems like guaranteed growth by the numbers.

Foolish roundup
This week's theme really is all about the numbers game. American Capital can take advantage of record-low lending rates for at least the next few years, TIBCO is setting itself up for huge big-data-center wins down the road, and Select Medical will be a big winner from Obamacare and an even bigger winner from an aging population.

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 this mortgage-REIT regain its shine?
There's no question Annaly Capital's double-digit dividend is eye-catching. But can investors count on that payout sticking around? With the Federal Reserve keeping interest rates at historically low levels, Annaly has had to scramble to defend its bottom line. In The Motley Fool's premium research report on Annaly, senior analysts Ilan Moscovitz and Matt Koppenheffer uncover the key challenges the company faces and divulge three reasons investors may consider buying it. Simply click here now to claim your copy today!


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