Just as we examine companies each week that may be rising past their fair value, we can also find companies potentially trading at a bargain price. While many investors would rather have nothing to do with companies tipping the scales at 52-week lows, I think it makes a lot of sense to determine whether the market has overreacted to the downside, just as we often do to the upside.
Here's a look at three fallen angels trading near their 52-week lows that could be worth buying.
Growth? I'll take it!
There's a point where even 2%-3% growth becomes attractive. We just hit it with Hewlett-Packard
First, the company still occupies the No. 1 spot in PC-industry market share, beating out Dell
The stock of steel
Fears already swirl that the U.S. will sink into another recession. I'll believe it when I see it. Rather than speculating on a worldwide slowdown, I'd suggest taking a closer look at worldwide steel producer ArcelorMittal
It's very difficult to argue against at least adding Arcelor to your watchlist, considering that this company has a long-term growth rate of 23% and is currently trading for less than 60% of its book value. Assuming worldwide growth doesn't come to a screeching halt, it's very likely that Arcelor's products will remain in high demand -- making its current forward P/E of 5.6 seem like a steal. Arcelor's rival U.S. Steel
Not to make light of the market plunge in the past week, but Brocade Communications
Brocade failed to live up to its own guidance -- a mistake, but probably not worthy of the 40% haircut the company has received since the news. It's important to remember that Brocade is still very profitable, with plenty of cash in its coffers to survive any industrywide slowdown. Rivals Cisco Systems
Notice a trend here? Single-digit forward P/Es and companies that are trading around or well below their book value. The three greatest bull markets were born from bouts of panic selling and this is likely to be true of this downturn. Stay the course and if you do nothing else, get these three companies on your watchlist.
What stocks have you bought (or sold) over the past few days? Share them in the comments section below.