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.
Booming in Brazil
For those of you unable to vacation or unwilling to go near an airport this holiday season, sit back and relax, because we're going to take a look at three international companies deserving a second chance. First up on the list is Brazilian homebuilder Gafisa
Unlike U.S.-equivalent homebuilders Toll Brothers
Two can play at this game
Kyocera boasts one of the healthiest balance sheets around, with $31 in net cash per share. Factoring in that the company has been profitable every year for the past decade yet trades at only 80% of book value and pays out a 2% dividend yield, and you get a recipe for a possibly undervalued stock. To top this off, Kyocera turned the tables on lawsuit-happy Eastman Kodak
The stock of steel
I can't say that the prospects of many steel companies intrigue me at the moment. Economic uncertainty around the world and the possibility of a hard landing for China's economy has successfully spooked investors away from the sector. This could make it the perfect time to consider Russian steel and coal giant Mechel
The future demand for steel is a very difficult concept to grasp -- both for me and for analysts, apparently. Over the past year, Mechel has launched past expectations by an average of 142%... and no, that's not a misprint. Mechel has been profitable in all but one year over the past decade, and book value has grown from less than $1 to more than $11 per share. The near-term outlook might not be as lustrous as investors would like, but it wouldn't take more than a quick polish to reveal that Mechel is a reasonable risk trading below book value.
You don't have to hop on a plane to be privy to some rosy international offers this week. All three are trading below book value and have a strong history of profitability. Because of that, I'm reaffirming my CAPScalls on Gafisa and Kyocera, and adding Mechel as an outperform. The question now is, would you?
In the meantime, consider adding these potential winners to your free and personalized watchlist and get your own personal copy of our free report, "The Motley Fool's Top Stocks for 2012," to see what our analysts have dubbed the "must-own" company for the new year.
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, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. 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.