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5 Battered but Worthy Stocks

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This past month has been brutal, and we've seen a lot of stocks lose value. Sometimes, a stock price declines because the market has efficiently digested new information and appropriately discounted the stock's value. And sometimes a stock price spikes downward because people panic.

But in Motley Fool CAPS, where 115,000-plus members offer their investing opinions, stocks with a maximum rating of five stars have a stellar record.

Still, some of our five-star stocks travel a turbulent road to good performance. And even though most of the five-star picks pan out, not all of them will. So let's examine some five-star stocks with large price declines over the past month. We'll look at some reasons for the decline and see whether these battered stocks are worth their stars.

Here are the past month's battered prospects:


CAPS Rating

30-Day Return

Navios Maritime (NYSE: NM  )



Renesola (NYSE: SOL  )



Freeport McMoran Copper & Gold (NYSE: FCX  )



Weatherford International (NYSE: WFT  )



National Oilwell Varco (NYSE: NOV  )



Source: Motley Fool CAPS. Decline from Sept. 3 to Oct 3.

Note that these are not recommendations to buy or sell; they're just interesting companies that deserve a look. So let's check out a few of them in further detail.

Navios Maritime
Long-term, this Greek shipping company should benefit greatly from worldwide economic expansion. But for now, Navios is a cyclical stock that's taking a pounding. The Greek shipping company currently sells at about 60% of book value -- 1.4-times tangible book -- and less than two times earnings. Navios also has relatively low debt -- debt to capital is 42% -- and is paying a 7.9% dividend supported by a 10% payout ratio.

Why is it so cheap? Two things appear to have precipitated the dramatic selloff. First, there's the worldwide economic slowdown and the accompanying decrease in demand for raw materials, which means less shipping. Second, a Chinese boycott of iron ore from Brazil over price increases has slowed things even further.

On the bright side, the Chinese will probably end the boycott when their iron ore inventories deplete -- and one analyst thinks that could be as early as next month. In addition, demand for raw materials should be among the first things to bounce back when world economies recover. And that's good news for shipping.

Revenue and earnings show absolutely explosive growth over the past few years at this Chinese solar company. Little wonder, since Renesola has been in the midst of two of the hottest growth stories recently -- China and alternative energy. But both sectors have been clobbered this year.

Contributing to the falling stock price are the sputtering U.S. and Chinese markets and the declining price of oil, the latter of which makes alternative energy less attractive. But although the near-term direction of the markets is anyone's guess, solar energy appears to be here to stay, regardless of oil-price gyrations.

National Oilwell Varco
The stock price of this seller of oil-drilling equipment and services has fallen by more than half since its highs in July. Since that time, the markets have reacted to the economic slowdown and the fears that things could get worse. The price of oil has fallen precipitously on those same fears.

Regardless of any short-term economic troubles, though, industrialization rolls on in many countries. Will China, India, and Brazil decrease their oil consumption in the long term? I doubt it. That means drillers are in demand, which means the drillers need rigs, which means this company should do well. With oil giants ExxonMobil (NYSE: XOM  ) and Chevron (NYSE: CVX  ) having incentive to drill, this stock is sure to bounce back.

Final thoughts
Despite the recent difficulties and share-price declines that these companies have experienced, enough CAPS members still rate them as outperformers to give the companies five-star status. Sometimes, investors can find great values among the steepest one-month decliners.

Do you agree or disagree? After researching these stocks on Motley Fool CAPS, make a call for "outperform" or "underperform." Your choice will help determine whether these companies will continue to rake in the five-star accolades. Come and join us on CAPS, absolutely free.

On Oct. 7, 2008, Fool co-founder David Gardner and his Motley Fool Pro team will invest $1 million in a portfolio designed to help you make money in any market. In the coming weeks, the team, relying heavily on proprietary CAPS "community intelligence" data, will establish long and short positions in a broad range of securities, including common stocks, publicly traded put and call options, and exchange-traded funds. To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.

Fool contributor Tom Hutchinson holds no financial position in any companies mentioned. The Motley Fool has a disclosure policy.

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Related Tickers

10/25/2016 4:02 PM
NM $1.18 Down -0.02 -1.67%
Navios Maritime Ho… CAPS Rating: ***
NOV $36.16 Down -0.60 -1.63%
National Oilwell V… CAPS Rating: *****
SOL $0.97 Down -0.01 -1.28%
ReneSola CAPS Rating: *
CVX $100.77 Up +0.11 +0.11%
Chevron CAPS Rating: ****
FCX $10.55 Up +0.37 +3.63%
Freeport-McMoRan C… CAPS Rating: ****
WFT $6.16 Up +0.01 +0.16%
Weatherford Intern… CAPS Rating: ****
XOM $86.72 Down -0.19 -0.22%
ExxonMobil CAPS Rating: ****