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.
Relax, it's a Maytag
Just as Whirlpool
Despite the 14% haircut on Friday, Whirlpool will remain strongly profitable. The company's revised forecast, though lower, still calls for $4.75-$5.25 in EPS this year and will extend its streak of profitable years to nine. If the housing market is as bad as KB Home's
Be SMART, don't be stupid
Shareholders of SMART Technologies
Traditional for-profit educators like DeVry
In August, SMART reported a tripling in its first-quarter profit despite an 8% decline in revenue. SMART is able to grow profits so rapidly because it keeps a close eye on margins; gross margins are now around 50%. Perhaps the ultimate value in the education sector, SMART is trading at less than five times forward earnings and recently authorized a share repurchase program which allows the company the option to buy up to four million shares on the open market as it sees fit. So I'm once again appealing to investors: Be SMART, not stupid!
The numbers game
The stock market is a numbers game -- and the numbers don't always add up. Take Agnico-Eagle Mines
Estimated production estimates for the Goldex Mine in 2012 vary somewhat, with a Dahlman Rose analyst claiming it would comprise 14% of all gold output next year, while the Fool's own Travis Hoium pegs the figure closer to 17%. However, either way you look at it, 14% or 17% doesn't exactly equal 23%. Here's a quick glance at the year-to-date gold output breakdown for Agnico-Eagle across its six mines:
Source: CNW Group. Numbers add up to less than 100% due to rounding.
Even with the $260 million third-quarter charge, Agnico-Eagle managed a record quarter in terms of cash production ($198 million) and kept costs at its Pinos Altos mine to a ridiculously low $295 per ounce. Agnico-Eagle will remain solidly profitable despite the Goldex mine closure, and it has a mixture of higher realized selling prices of gold and increasing volume at its other mines to thank for that. Agnico-Eagle is valued at only 11 times forward earnings. Now compare this to rival New Gold
Even after a violent move higher in the indexes over the past month, there are still values left to be found. With valuations that can only be described as staggeringly cheap relative to their sector, these three stocks represent the true essence of "bottom fishing."
What's your take on these three stocks? Are they worth their weight in gold and then some, or should we toss them back from whence they came? Share your thoughts in the comments section below and consider adding Whirlpool, SMART Technologies, and Agnico-Eagle Mines to your free and personalized watchlist to keep up on the latest news with each company.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong and on Twitter, where he goes by the handle @TMFUltraLong. 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.