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.
Everyday low value price
This is one selection my mother, a lifetime addict to shop-at-home TV networks, would have been very proud of. ValueVision Media
Don't think the weakness we've witnessed in consumer electronics is causing headaches for just the big-box retailer Best Buy
What does impress me is that despite the loss, ValueVision grew its gross margin 120 basis points over the year-ago period and boasts a relatively strong balance sheet with a manageable level of debt. This says to me that ValueVision's other business segments -- jewelry, home, health and beauty, and fashion -- are doing well and that this company is on pace to turn itself around. With its stock at just 69% of book value, I'd be willing to make the call to buy here.
In defense of defense
Keeping with this week's theme of small-cap turnaround stories, I'm moving on to Anaren
Anaren's CEO, Lawrence Sala, noted that the weakness in wireless infrastructure orders should be temporary and that its fiscal 2012 orders remained strong. He went on to say that he expects to see this strength translate to the bottom line by the fourth quarter.
Anaren also has a very strong balance sheet, ripe with $52.8 million in cash (more than $3 per share) and no debt. This isn't a story of a company struggling to remain profitable, and its cash provides more than an ample buffer to enact cost-saving initiatives. Finally, Anaren put its money where its mouth is and repurchased 256,000 shares of stock during the quarter. This has all the makings of a solid turnaround play.
Say yes to GPS?
Despite beating the dead horse repeatedly when it comes to avoiding GPS navigation stocks -- including Garmin -- I'm actually going to give one a nod: TeleNav
The only knock against TeleNav that has investors worried and short-sellers clamoring for a position is its reliance on Sprint Nextel
This week we took a look at three small-cap companies with a really good chance at turning around their aching businesses. All three share strong balance sheets and either are (TeleNav and Anaren) or recently were (ValueVision) quite profitable. I'm so confident these three names will bounce off their lows that I'm going to make a CAPScall of outperform on each one.
In the meantime, consider adding these potential winners to your free and personalized watchlist and get your own personal copy of our latest special report, "The Motley Fool's Top Stock for 2012," to see which company our chief investment officer has dubbed the "Costco of Latin America." Best of all, this report is completely free, so don't miss out!