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3 Stocks Near 52-Week Lows Worth Buying

Sean Williams
February 14, 2012

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 to the upside.

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

Seriously, it's time to buy natural gas
If history has taught us anything, it's that the best times to buy stocks are when pessimism is at its peak. For the natural gas market, I don't see how things can get any glummer. Natural gas prices are at decade lows, and large player Chesapeake Energy (NYSE: CHK  ) recently forecasted a 70% reduction in dry gas capital expenditures in the near term. Low prices are definitely discouraging production in an attempt to rein in falling prices. This is why now could be the perfect time to take a position in EXCO Resources (NYSE: XCO  ) .

In November, EXCO alluded to production cuts similar to those that Chesapeake just announced. EXCO forecast $710 million in capex spending in 2012, which is a 30% drop from 2011. But don't think that has deterred EXCO insiders from being bullish on the company's various shale oil and gas deposits. Insiders have made 13 separate purchases over the past six months totaling 9.2 million shares. To top this off, EXCO is trading at just 87% of its book value and yields north of 2%. I think investors would be foolish (small "f") to turn down EXCO.

Is this the year of the junior miner?
Could this be the year that junior miners really take off? The valuations are compelling enough to merit it. On more than a few occasions, I've come to the support of Golden Star Resources (AMEX: GSS  ) , a personal holding of mine, which is trading very close to book value but has had a hard time controlling its costs and production levels. Claude Resources (AMEX: CGR  ) could be the latest member we can add to the list of inexpensive, but growing, junior miners.

Just last week, Claude projected that it would produce 50,500 ounces of gold in 2012, which would represent a 13% increase over its 2011 output. A lot of investors took this figure with a grain of salt because Claude has missed Wall Street's EPS estimates in four straight quarters, but I think the groundwork has been laid for a real surprise in 2012. Claude s