3 Stocks Near 52-Week Lows Worth Buying

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Just as we examine companies each week that may be rising past their fair value, we can also find companies potentially trading at a bargain price. 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 to the upside.

Here's a look at three fallen angels trading near their 52-week lows that could be worth buying.

A takeover target
It almost leaves a bad taste in my mouth to recommend BMC Software (Nasdaq: BMC  ) after a decade marred with earnings disappointments, but the business finally has the right valuation for its potential.

The reason I finally find BMC intriguing after all these years has to do with its transition into the cloud. Traditionally an IT service provider, BMC wisely has decided that it's going to find less competition by moving its business strategy toward cloud computing, and I feel that bigger companies may take notice. BMC is solidly profitable and trading at just nine times forward earnings. It also boasts a net cash position of $1.14 billion or about $6.64 per share, and its operating margins are near a high for the past decade.

As for a company that may find BMC attractive? For purely speculative purposes, I think IBM (NYSE: IBM  ) makes a lot of sense as a buyer. BMC's current $5.3 billion market valuation is reasonable, and it would give IBM complementary IT services along with BMC's potential cloud applications. Either way, I think buying BMC finally makes sense here.

Plop plop, fizz fizz...
Plop plop, fizz fizz, here's where the value is! If Monster Beverage (Nasdaq: MNST  ) , the name behind Monster energy drinks and formerly known as Hansen Natural, can rally 9,400% in just eight years and trade at forward multiple of 27, then a company like Cott (NYSE: COT  ) definitely deserves more respect than it's currently receiving.

In its latest quarter, Cott reported a sales jump of 26% including its recent purchase of Cliffstar. Excluding that purchase, organic growth was still 9%. The biggest drag on Cott has been declining gross margins, which the company has attributed to higher commodity costs and an unfavorable product mix. I feel the company will be able to adjust to higher costs by passing price increases along to consumers -- it has worked for Monster, there's no reason to assume it won't work for Cott. Reasonably priced at nine times forward earnings and hovering right at book value, this is the type of stock that investors should sip on.

Orange you glad I picked Dole
It was not a great year to be a Dole Food (NYSE: DOLE  ) shareholder in 2011. Last year the company shed 36% of its value thanks in part to earnings weakness in Europe. But I think it'd be unwise to dismiss the company as a lost cause with turnaround plans in place for 2012.

First, Dole is in the process of restructuring its business to reduce expenses and deal with the rising cost of vegetables. Second, the company's recent purchase of SunnyRidge Farms will add to Dole's already existing blueberry and blackberry operations. Finally, Dole has been introducing new frozen-fruit products and continues to enjoy solid strength in its salad business. While Dole will never be a company that surprises Wall Street with double-digit growth, at just six times forward earnings and only 89% of book value, it looks like it has a good shot at a rebound in 2012.

Foolish roundup
This week we looked at three imperfect companies that are working toward correcting their issues. With all three profitable and priced reasonably, I see no reason to suggest why they wouldn't bounce off their lows. In fact, I'm so confident these three will rebound that I plan to make a CAPScall of outperform on each one.

In the meantime, consider adding these potential winners to your free and personalized watchlist and get your own personal copy of our latest special report, "The Motley Fool's Top Stock for 2012," and see what our chief investment officer has dubbed the "Costco of Latin America." Best of all, this report is completely free, so don't miss out!

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He may one day buy a pork belly contract, but he sure as heck doesn't want to take the delivery! You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. The Motley Fool owns shares of IBM and BMC Software. Motley Fool newsletter services have recommended buying shares of Monster Beverage. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that's always on the lookout for a good deal.

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