You love buying your shirts when they go on sale. And who can resist a buy-one, get-one-free offer? So when our stocks go on sale, why do we bemoan their low prices?
Smart investors like Warren Buffett or Marty Whitman love it when their stocks are suddenly selling at bargain-basement prices. For them, these companies become no-brainer buys.
The investors in the Motley Fool CAPS community also like a bargain, apparently. Below, you'll find three companies whose shares are selling 50% or more below their 52-week highs, but which still earn high honors from our investor-intelligence database. Consider it a BOGO sale on stocks.
|
Company |
CAPS Rating (out of 5) |
% Off 12-Month High |
|---|---|---|
|
Allied Irish Banks (NYSE: AIB) |
**** |
77% |
|
China Security & Surveillance Technology (NYSE: CSR) |
***** |
50% |
|
PolyMet Mining (NYSE: PLM) |
**** |
62% |
Naturally, we want you to look a bit closer at these stocks before buying. You can get low-priced appliances in the dent-and-ding section of your home-remodeling superstore, but their quality might not be so good. Same thing here: Make sure there's nothing seriously wrong with the company before you plug it into your portfolio.
Take two; they're small
Irish eyes haven't smiled on Allied Irish Banks and Bank of Ireland (NYSE: IRE), as they have pretty much walked lockstep to lower prices, with Bank of Ireland off about 80% from its highs. Of course, there's good reason for their fall: "net indebtedness of the banks to the rest of the world jumped from 10% of gross domestic product to over 60%."
Yet Bank of Ireland's restructuring and recapitalization has removed a lot of the systemic risk from the balance sheet, according to analysts, making its stock price undervalued, and Allied Irish Banks could bounce back, too, if the European Central Bank's financial stabilization plans take hold. Ignore Moody's downgrading Portugal's debt for the time being. If those banks bounce back, it would be important for other European banks, including ING Groep, which has significant European exposure, and Banco Santander (NYSE: STD), which would benefit from Spain's restructuring.
CAPS member robertmartina is looking for a major correction of the banks' value. About Allied Irish Banks, he says:
real money play...love this one!...no downside risk...great management and gameplan...this stock should triple by year end...long term three year target $15 to $20, or higher...get in now and enjoy the ride !!
A reserve player
Even though China Security & Surveillance Technology says it expects to realize higher revenues than previously forecast, earnings are going to come in at less than analyst expectations. That continues a trend started earlier this year as competition intensified for the installation of monitoring devices.
Honeywell (NYSE: HON) and United Technologies (NYSE: UTX) also help the Chinese government keep tabs on its citizens, albeit saying it's for security purposes rather than repression.
Alwayzwrong says its stock offering affected China Security & Surveillance Technology's shares, but barring future ones at similarly discounted prices, the stock is priced to buy.
Dilution aside, management has done a very good job of growing the company as fast as possible, and at these price levels, this is a pretty compelling valuation. They have more-or-less met the expectations of the market, when the market has placed reasonable expectations upon them.
With friends like these
As if environmental opposition to its proposed copper-nickel mine in Minnesota weren't enough, PolyMet Mining also faces the potential collapse in prices for copper now that it has been reported that demand in China may fall severely. June shipments dropped 17% from May and are down 31% from a year ago, meaning pricing is going to take a hit. Longer-range trends might be positive, but the short term certainly seems iffy.
Yet CAPS member jed71 keeps looking at the bright side of the situation, noting that now there's a plan in place with the government for the mine.
Looks like environmental approval of their sulfide ore mining project in Minnesota is inevitable. They already have much of the infrastructure already in place to process the deposits from the mine. Once they receive final approval, they are about one year from kicking off mining operations.
Have half a mind
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