"Don't catch a falling knife," as the old saw commands. (Pardon my mixing a cutlery metaphor.) The idea of buying a former superstar stock at a discount price certainly has its attractions, but you have to make sure you catch the haft -- not the blade. That's where Motley Fool CAPS comes in.

Today, we once again stand beneath Mr. Market's silverware drawer, to measure which knives have fallen the farthest. Then we'll call on CAPS to ask which of these stocks -- if any -- Foolish investors believe are ready for a rebound. Let's meet today's list of AMEX contenders, drawn from the latest "New 52-Week Lows" list on WSJ.com:


52-Week High

Recent Price

CAPS Rating (5 Max):

Pioneer Drilling  (AMEX:PDC)




Minefinders (AMEX:MFN)




Seaboard (AMEX:SEB)








Interoil  (AMEX:IOC)




Companies are selected from the "New 52-Week Lows" list published on WSJ.com on the Saturday following close of trading last week. Recent price and 52-week high provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Knives and knaves
By close of trading Friday, no fewer than 469 stocks on the AMEX -- more than half -- landed with dull thuds at their 52-week lows. The more popular Nasdaq and NYSE fared little better. The Nazz booked 619 long-term losers (one in five), while the NYSE crossed the hundred-dozen mark -- nearly half of the exchange's denizens crashed to their lows of the past year.

Surveying the carnage, you can be forgiven for thinking the sky really is falling. However, I think we're in a turkey shoot. The opportunities to buy high quality, well-respected stocks at bargain-basement prices look so plentiful, in fact, that we're once again splitting this column -- this time in three -- to tackle the major stock indexes one at a time.

The table above, you will notice, contains only AMEX-listed stocks. I'll address the potential Nasdaq and NYSE bouncers in separate columns. But for now, let's dive straight into the buy arguments for the best-rated stock from the AMEX side of the market.

The bull case for Pioneer Drilling

  • Back in April, CAPS All-Star falcon2382 described Pioneer as "a smallcap company that provides contract land drilling" for big-time natural-gas players such as Anadarko (NYSE:APC) and Chesapeake Energy (NYSE:CHK). CAPS player falcon2382 expects "these smaller players to become potential acquisition targets as larger companies require more resources" and continues: "But even if they don't get scooped up by larger players, they will be contracted out more and more as the need for further equipment and manpower intensifies in this bull energy market."
  • Fellow All-Star MarkBDow agrees. In April of last year, he wrote: "[T]he current [demand] for oil necessitates further exploration and development of our oil reserves. At the current price of oil and given the likely rise over the next several years, exploration and development of new sources of oil is now a more profitable venture and will probably see a sharp increase in new capital over the next couple of years."
  • So the outlook for energy companies is good. Roger that. But why buy Pioneer in particular? CAPS player old3puttdean succinctly summarized the highlights of the bull thesis just a month later: "Good management, low debt, lots of cash."

Yet while that may have been true when old3puttdean penned that pitch last year, I'm not so sure it remains true. Pioneer has only about $18 million cash in the bank right now, against more than $285 million in debt. That's nowhere near the leverage of some larger drillers, such as Nabors Industries (NYSE:NBR), for example. But I still wouldn't call $285 million "low," or $18 million "lots."

For all that I quibble over the numbers, the valuation does intrigue me. Pioneer sells for a price-to-earnings ratio of less than 6, which looks pretty darn attractive relative to analyst expectations of 13% long-term profit growth. And although I'm not thrilled to see Pioneer's free cash flow (FCF) lag its reported net income, I can't help noticing that FCF turned a corner this year. In years past, Pioneer hadn't been generating FCF at all.

So to sum up, in Pioneer we have an attractively priced company operating in an attractive industry; a debt load that, although substantial, is not the worst I've ever seen; and last, but not least, a potential takeover target. Sounds good to me.

Time to chime in
Of course, the aim of this column isn't just to tell you what I think about Pioneer Drilling. I'll be the first to admit that I have little experience investing in the oil patch, and that plenty of Fools know more about this industry than do I.

Speaking of which, if you're one of them, then here's your chance to show off. Click on over to CAPS now, and toss your two cents into the pot. Is Pioneer worth a walk on the wild side, or are investors better off sticking closer to civilization?

In the coming weeks, 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. The service, which just launched, will rely heavily on proprietary CAPS “community intelligence” data to 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 Rich Smith owns no shares of any company named above. You can find him on CAPS, pontificating under the handle TMFDitty, where he's ranked No. 881 out of more than 115,000 players. Chesapeake Energy is an Inside Value recommendation. The Fool has a disclosure policy.