If you're aiming to "buy low and sell high," then it makes infinite sense to start your search with bargain-priced stocks. Regularly reviewing a list of stocks trading near their 52-week lows can be a great first step.

Here, I'll try to do the initial legwork for you. To prevent us from being inundated with scores of disparate companies, I'll conduct my search by industry. This will allow us to make some initial comparisons among semi-related companies.

There are 24 industry groups as defined by the Global Industry Classification Standard (GICS): Capital Goods is one of them.

Below are the top five companies in this space (by market cap) that are hugging 52-week lows.

Company

Recent Price

52-week Low

52-week High

P/E Ratio (Trailing)

Koninklijke Philips Electronics NV (NYSE: PHG)

$30.40

$26.52

$36.06

17.7

Lockheed Martin (NYSE: LMT)

$69.68

$67.68

$87.18

9.3

Raytheon (NYSE: RTN)

$45.95

$42.65

$60.10

9.5

Rockwell Collins (NYSE: COL)

$58.14

$51.85

$68.04

16.5

L-3 Communications (NYSE: LLL)

$70.69

$66.80

$97.81

9.1


Source: Capital IQ, a division of Standard & Poor's.

All but the largest company, Phillips, relies heavily on the defense industry for its sales. Shares of defense players swooned this summer as the U.S. government intimated billions in defense cuts. Defense Secretary Gates wants to reduce spending on "support contractors" by 10% in each of the next three years.

Lockheed Martin, for example, made several cuts anticipating less support work, but remember that it has a 140,000-person strong workforce, so even news stories that tout thousand-person reductions are less than 1%.

Ultimately, it's very possible that the net effect is some retraction but also redistribution. I believe it behooves investors to dig into the defense industry to try to figure out the winners and losers. Or to assess the situation on a macro level and, if the share price drops appear overblown, buy a market basket of defense contractors.

If you are interested in reading more about these stocks, add them to My Watchlist to find all of our Foolish analysis on them.

Anand Chokkavelu doesn't own shares of any company mentioned. The Fool owns shares of L-3 Communications Holdings. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.