Drop-Dead Gorgeous Stocks

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"The idea of buying a former superstar stock at a discount price certainly has its attractions, but you've got to make sure you catch the haft -- not the blade."

So goes the thesis of my weekly Fool.com column "Get Ready for the Bounce." Therein, I run the 52-week-lows list compiled by Nasdaq.com through the "wisdom of crowds" meter that we call Motley Fool CAPS. And out the other end comes a list of stocks that have fallen so far, Foolish investors figure they're just bound to bounce back soon.

But is there a way to cash in on fallen angels who've plummeted even further? Perhaps. If a stock that's fallen for one year straight has headroom, then maybe a stock that's fallen even further, and longer, has room to soar back even higher -- in which case, an apparently left-for-dead stock could offer us a drop-dead gorgeous entry price. We're going to test that thesis today, starting with five stocks that just hit their five-year lows:

	Recent Price	CAPS Rating (5 max):
Teekay LNG Partners  (NYSE: TGP)	$22.48	*****
Teekay Offshore Partners (NYSE: TOO)	$15.79	****
Actions Semiconductor (Nasdaq: ACTS)	$3.06	****
Telecom Italia  (NYSE: TI)	$16.78	**
Redwood Trust  (NYSE: RWT)	$20.10	**

Companies are selected from the "New 5-Year Lows" list published on MSN Money on Friday. CAPS ratings from Motley Fool CAPS.

Left for dead? Or drop-dead gorgeous?
Each of the stocks listed above has shed between 35% and 45% of its value over the past year, and currently sits at or near its five-year low. Wall Street has left 'em for dead, but curiously, Main Street investors think at least three of these stocks have a chance to bounce back.

Curiouser and curiouser
But hold on a second. Am I seeing double, or is one of these companies so nice that it got named twice? Yes and no. Teekay LNG and Teekay Offshore may sound similar, but that's only because they've got the same daddy. Each operates as a subsidiary of oil tanker operator Teekay, based in Vancouver and headquartered (whether for tax purposes or for the beaches, I'm not sure) in Bermuda.

Of the two Teekays, the LNG variant turns more heads on CAPS, and looks to be the better candidate for "drop-dead gorgeous" status. Let's take a closer look at that one, and see if its beauty is more than skin deep.

The bull case for Teekay LNG Partners
With unanimous approval among the CAPS All-Stars who've rated it, it seems that Fools see a bright future in liquefied natural gas -- which is precisely what Teekay LNG ships in its, er, ships (along with liquefied petroleum gas and plain ol' crude).

• All-Star CAPS player metoo105 argued last spring that: "The whole sector is obviously good to great. Classic growth priced like value. Plus, both have mgmt's that are shareholder oriented (there's a nice div for instance). And [Teekay LNG] maybe seems a little better in that they've got more experience in what seems to be a highle related business. But still, IMO, [Golar LNG (Nasdaq: GLNG)] is quite a bit better. I forget exactly how I formed this opinion along the way, call it a hunch, if you like. But I've been following them both for over a year now."
• OK. We weren't really talking about Golar, but thanks for the tip, metoo105. Getting back to the TKs, mike53w posted in February to echo metoo105's sentiment about the: "nice dividend. Seem to like make money for their shareholders and are good at it. ... This business is only going to grow as they add more ships to their fleet in the coming years."
• More recently, bgfmandt observed that: "Revenues continue to rise and it will finally start seeing profits. ... [yet the stock] hasn't been this low since it's initial offering …"

And so here sits Teekay LNG at a price we've never before seen, yielding a 9.5% dividend, and daring you to bet it won't fall further still. Will it?

You're asking the wrong guy. Yours Fool-y not only missed the oil boom, I sat mutely by, watching the stocks run up beyond all reasonable valuations, uncomprehending and un-buying into anything to do with hydrocarbons. Fact of the matter is, the furthest I've delved into this sector was in recommending Chesapeake Energy (NYSE: CHK) on CAPS, and even that was mainly on the say-so of Motley Fool Inside Value head Philip Durell.

Time to chime in
Chances are, whoever you are, you know energy stocks umpteen times better than I. So what do you say? Is Teekay LNG Partners going to keep dropping till it's dead, or is this stock just plain drop-dead gorgeous? You tell me. And tell the whole CAPS community, too. The price of admission can't fall any further; it's free.