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.
Reach out and touch this stock
Don't look now, but the telecom giants are headed in opposite directions. It's fairly common for Verizon Communications
Remember, when you purchase a larger telecom, you're not going to get exceptional growth or mind-boggling earnings beats. Instead, you get stable cash flow, an often-uninterrupted streak of dividend increases with high yields, and a business that can thrive in a growing or shrinking economy. AT&T is now trading well below its five-year average in P/E and price-to-book, all while sporting a delectable 6% dividend yield which has grown annually by more than 5% over the past five years. Dislike market volatility? Make AT&T your new friend.
An interesting coincidence?
I can't say I'm much of a fan of buying into buyout rumors, but I'm willing to make an exception for Boston Scientific
For years, it's been rumored that Johnson & Johnson
Plop, plop, fizz, fizz, oh what a relief it is
No, this isn't going to be a plug for Alka-Seltzer, but it most definitely is a plug for beverage producer PepsiCo
Like AT&T, PepsiCo offers shareholders steady profitability and a handsome dividend; so what's wrong with the stock? One possible reason why PepsiCo is nearing a new 52-week low relates to its reliance on Europe for a sizable portion of its revenue. It's not so much about the fear that volume in Europe will drop as it is a question of how much Pepsi will lose in currency translation if the euro continues to fall.
Although these fears have merit, Pepsi has a long history of proving pessimists wrong. With a 3.4% yield and at 13 times forward earnings, Pepsi boasts a cheaper forward multiple than Coca-Cola
Past results may be no guarantee of future results, but these companyies all offer the right mix of value and products to weather anything short of a catastrophic global economic collapse. Trust in those companies that reward shareholders with increasing dividends and you just might sleep better at night.
What's your take? Do these fallen angels deserve a second chance or are these stocks washed up? Share your thoughts in the comments section below and consider adding AT&T, Boston Scientific, and PepsiCo to your watchlist to keep up on the latest news from each company.
Fool contributor Sean Williams 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 shares of Johnson & Johnson, Coca-Cola, and PepsiCo. Motley Fool newsletter services have recommended buying shares of Johnson & Johnson, Coca-Cola, PepsiCo, and AT&T, as well as creating a diagonal call position in Johnson & Johnson and PepsiCo. 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 that's always on the lookout for a good deal.