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 at least 50% below their 52-week highs, but which still earn high honors from our investor-intelligence database. Consider it a BOGO sale on stocks.
|
Stock |
CAPS Rating
|
% Off 12-Month High |
|---|---|---|
|
Bank of Ireland |
**** |
81% |
|
Conexant Systems |
**** |
57% |
|
Hercules Offshore |
***** |
67% |
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
The stress tests Europe's central bankers put their banks through didn't really require them to work up much of a sweat, let alone stress them out -- only seven banks out of 91 failed the tests.
Many analysts were left concluding the tests amounted to little more than window dressing since they only applied losses to debt held in bank trading accounts, and not the sovereign debt held to maturity. It's a hurdle set so low the banks were able to step over it without breaking stride. For example, considering the trouble Greece has been through, and the bailout it received, it's likely going to have to restructure its debt. Yet according to the stress tests, banks holding Greek bonds will be paid off at par on their held-to-maturity debt. Even National Bank of Greece
Although stocks rallied after the news, next week might not see the same euphoria. The tests failed to reassure anyone European financial institutions are prepared to handle a shock to the system, and worries over sovereign debt may return.
Despite the ephemeral nature of the tests, Irish eyes were smiling on Bank of Ireland and Allied Irish Banks
Among the PIIGS, the Irish government was the first to implement an austerity program, and [Bank of Ireland] itself is doing the right things for the future.
A reserve player
Recognizing the difficulty its debt-laden balance sheet would create in combating competition from Texas Instruments
Maybe the market just didn't like the new debt and equity offering it made earlier this year, but it's been all downhill for Conexant's stock since, with it getting cut in half since March alone. You won't find CAPS member dogbot in that group, though. He thinks the chipmaker's actions better position it for future growth:
This company has done a good job at restructing it's financing. They should do well as a new generation of products start to contribute to the sales mix.
With friends like these
Is President Obama doing an end-run around the injunction imposed on his drilling moratorium by having the government drag its feet on issuing permits? Hercules Offshore says that, despite being a shallow water driller, about a third of its rig fleet has been idled because of government foot-dragging. If the situation doesn't improve, about 80% of its fleet could be idle by next month.
For anyone with a short-term time horizon, CAPS member stockfreak1 says Hercules will be affected by the moratorium:
The drill moratorium will no doubt have continued negative pressure on this company which already has a debt to equity ratio of .89. Assets will deplete against negative guidance which could likely cause this thing to go to $2.
Have half a mind
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