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.
A golden opportunity
Yeah, folks, here comes the "homer" pick. As an owner of Golden Star Resources
Prestea is eventually expected to dramatically increase Golden Star’s earnings potential. Not known for low-cost production, Golden Star does rely on high gold prices and volume to bring in profits. Currently valued at 9 times forward earnings, Golden Star already appears to be a compelling buy even though it's a repeat production-reduction offender (try saying that three times fast!). While I could just as easily own Newmont Mining
Jump in this barrel
Investing in the financial sector three years ago was akin to jumping in a barrel and going over Niagara Falls. Once in a while, though, people did manage to come out unscathed on the other side, as in the case of First Niagara Financial
First Niagara has just about done no wrong even as many of its peers collapsed around it. Over the past couple of years, assets, deposits, and shareholder equity have risen sharply. Most importantly, over the past decade, which encompasses two recessions, the company turned a profit each and every year. Yielding an insane 6.7% now and with a dividend history that shows an incredible annual growth rate of 16.5% over the past 10 years, it puts many of its savings-and-loan peers to shame. Despite this rapid growth, the company is valued at only 71% of book value, leaving plenty of room for upside growth.
Stop me if you've heard this one before -- I think highly of Teva Pharmaceutical
With that being said, Teva's prospects moving forward look bright. Having already licensed more than 1,450 molecules, Teva has a pipeline of generics that appears strong. Currently valued at what I consider a bargain-basement 6 times forward earnings and boasting a long-term growth rate of 9%, you may need a doctor if you turn down Teva at these levels.
Just like the 1950s, we've established some oldies but goodies this week. Old-fashioned, high-growth, stable businesses with good growth prospects are not surprisingly often a bright spot for long-term investors.
Fool contributor Sean Williams owns shares of Golden Star Resources but has no material interest in any other companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong. The Motley Fool owns, and Motley Fool newsletter services have recommended buying, shares of Teva Pharmaceutical. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 that’s always on the lookout for a good deal.