Just as we examine companies each week that may be rising past their fair value, we can also find companies potentially trading at bargain prices. 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.
Gold in them thar hills
Just because I've recently shown a lot of love for the junior miners doesn't mean that I've completely forgotten about large-scale miners. AngloGold Ashanti
For the upcoming fiscal year, AngloGold is predicting that gold production will be in the range of 4.3 to 4.4 million ounces with a cash cost of $780 to $805 per ounce. Investors may have pounced on the stock because it implies relatively flat year-over-year production (4.33 million ounces in 2011) and higher cash costs ($728 per ounce in 2011). But considering that gold is on an 11-year winning streak, there's no reason to believe AngloGold won't top its fiscal 2011 EPS of $3.36. In fact, based on forward estimates, the company is trading below eight times fiscal 2013's forecast EPS. Let's not forget that AngloGold also more than doubled its dividend in 2011 from 2010. There's no reason with gold prices as high as they are that AngloGold's cash flow won't support a higher dividend.
No kiss kiss, no bang bang
There's no glory in bringing up the rear. Electronic Arts
Electronic Arts fully understands that the future driving force behind its revenue will be its digital division. For the third quarter, digital revenue rose 79% with a 442% spike in full-game downloads and a 25% jump in mobile and digital handheld revenue. Overall, digital revenue comprised 23% of EA's third-quarter 2012 revenue while comprising only 15% of its third-quarter 2011 revenue. EA, like online-gaming rival Zynga
It seems like natural gas plays are becoming a regular inclusion in this weekly series. Up this week is oil and gas exploration company Harvest Natural Resources
First, Harvest's Venezuelan affiliate Petrodelta continues to grow at an incredible pace -- production was up 36% in the recent quarter. Investors might be writing off Harvest completely, but Petrodelta is keeping Harvest quite profitable. Harvest also noted that, despite its wells showing an unprofitable amount of hydrocarbons on their initial dig, Block 64 in Oman, of which it owns an 80% interest, does indeed have probable gas reservoirs. Accessing them is of course another story altogether. At less than five times forward earnings, I'd take the gamble on Harvest Natural.
Natural resources and video games -- that's what I call a fun weekend! When calmer heads prevail, these stocks should once again find their paths trending higher. 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!
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He still prefers the old-school Nintendo Entertainment System to the new gaming systems. 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. The Motley Fool owns shares of Harvest Natural Resources. Motley Fool newsletter services have recommended buying shares of Chesapeake Energy. 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.