"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've got 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, measuring 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 contenders, drawn from the latest "New 52-Week Lows" list on WSJ.com:


52-Week High

Recent Price

CAPS Rating
(5 max):

ConocoPhillips  (NYSE:COP)




Aflac  (NYSE:AFL)




Walt Disney  (NYSE:DIS)




Caterpillar  (NYSE:CAT)




Alcoa (NYSE:AA)




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

Knives and knaves
Exactly 555 NYSE-listed stocks closed out the trading week Friday at their lowest prices in a year. Likewise on the Nasdaq, one out of every eight listings -- 391 stocks in all -- hit rock bottom on Friday.

With so much bad news, you can be forgiven for thinking the sky really is falling. Me, I've got a different point of view: I think we're in a turkey shoot -- and I'm not the only one. Look up above, and you'll find today's list of NYSE 52-week-lows chock-full of nothing but above-average-rated stocks. Five stocks that the world seems to hate, but that investors at any other time in history would kill to own at today's prices.

Seriously, folks, with unemployment hitting all-time highs and job security at all-time lows, is today really the time to be selling supplemental health insurer Aflac? Has the world outgrown its need for Alcoa's aluminum or Caterpillar's earth-movers? Is Mickey Mouse passe?

No need to answer. Those were rhetorical questions. Judging from the ratings they give the stocks, Fools don't believe any of these stocks are going away any time soon. Nor do they fear for ConocoPhillips' safety. It's the top-rated stock on today's list, and the one we'll be profiling.

The bull case for ConocoPhillips
All February long, CAPS members have been pounding the table and insisting Conoco's a bargain. Here are just a few of the comments voiced over the past two weeks:

  • aldough exclaims: "Now trading beneath book value, even when excluding goodwill. Nothing may shine in the near future, but I think this one truly is a bargain."
  • As does brewerdude: "Besides the fact that Warren Buffett has been buying and it yields a nice 4% dividend, check out the fundies...awesome cash flow generation. As of this morning, at $46, it trades for less than [book value per share] of $62/share. Then look in the balance sheet and you'll see that it's trading for way less than the per share value of it's PP&E, $56/share. Now toss in it's P/E which is half of it's 5-yr avg and the cheapest (on a P/E basis) among the oil majors and this falls into the buy category." (One clarification is needed here, Fools. As of last week, we learned that Buffett actually began trimming his position in Conoco. Make of that what you will.)
  • Last but not least, we come to Jersey17, who argues that: "Conoco is ... currently undervalued relative to [other oil majors]. Its earnings will improve as their cost cutting measures take hold and natural gas and oil prices recover. ... [Conoco] has more upside then [ExxonMobil (NYSE:XOM)] or [Chevron (NYSE:CVX)] right now and with its solid management and balance sheet as well as its stock buyback program, its sure to be a winner."

Less than half the size of Chevron by market cap, and one-sixth the mass of ExxonMobil, ConocoPhillips is nonetheless one of the heavyweights of the industry we so fondly term "Big Oil." But you knew that already, so here's something you may not have noticed: Relative to Conoco, Chevron may have more than twice the market cap ... but it has only about 20% more revenue, and only about a 1.2-percentage-point lead in operating margin on those revenues. Which suggests to me that either: (a) Chevron is overpriced, or (b) Conoco is way undervalued.

Which is it, exactly? You be the judge. Right now, Conoco stock sells for about 94% of its tangible book value (TBV) per share. Chevron shares command 160% of their TBV. Exxon sells for nearly 3 times the value of such tangible assets.

Comparisons of current P/E ratios, however, are made tricky by the $25 billion charge to earnings that Conoco took last year (while Chevron and Exxon are keeping any possible similar bad news to themselves). But if you place any faith in estimates of future earnings, you cannot help but be intrigued by the fact that Exxon sells for 10.2 times forward earnings, Chevron 8.1 times, and Conoco a mere 6.5.

Time to chime in
'Most any way I look at it, ConocoPhillips offers a very compelling valuation relative to its peers. But that's just my opinion. What's yours?

Jot a few words down on Motley Fool CAPS: It's fun, it's free, and it just might make you famous.

Walt Disney is a Motley Fool Inside Value selection. Walt Disney and Aflac are Stock Advisor recommendations.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 558 out of more than 125,000 members. The Fool has a disclosure policy.