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 when the market reacts to the upside.
Here's a look at three fallen angels trading near their 52-week lows that could be worth buying.
A shining example of a good value
Many investors have written off silver and gold miners for dead in the interim as China grapples with slowing GDP growth and metal-hungry sectors like electronics have seen capital expenditure pullbacks across the board. That doesn't, however, mean that you have to ignore amazing values in the silver space like Great Panther Silver (NYSEMKT:GPL) because they'll likely bottom long before the market does.
Great Panther recently lowered its full-year silver production to a range of 2.2 million to 2.4 million silver-equivalent ounces for fiscal 2012, which is below its prior guidance of 2.5 million to 2.75 million silver-equivalent ounces. Many have taken this as a sign that production problems in Mexico are hampering its results, but I would suggest that recent ore recovery rates would signal just the opposite.
Thanks to recent mine upgrades at Guanajuato, operating efficiencies have improved, resulting in a combined mine recovery rate of 90.9% for silver and 91.9% for gold. Also, gold production doubled in Great Panther's most recent quarter, leading to what I anticipate will be even better cash flow stability.Finally, the Federal Reserve's loose policy of buying mortgage-backed securities until unemployment dips below 6.5% likely means that a steady increase in the money supply should be a long-term positive for dollar-hedging stocks like gold and silver miners.
Your monthly paycheck
It's time for one of those "Duh!" moments! Do you like dividends? Of course you do... DUH! That's why I think the heavily beaten-down Alpine Total Dynamic Dividend Fund (NYSE:AOD) could be the perfect Christmas stocking stuffer over the next few years.
This fund, with a management team that spans between 12 and 61 years of experience, invests in dividend-paying companies throughout the globe. With its focus set on dividends, this means that the fund will have a nice mix of small-, medium-, and large-cap companies, as well as a differing degree of dividend growth. The funds' largest holding is a personal favorite of mine: Apple (NASDAQ:AAPL), a company sitting on $121 billion in cash that is capable of generating up to $40 billion in cash even after it pays out its dividend. But there are plenty of other smart international holdings, including British American Tobacco (NYSE:BTI) to take advantage of consumers' addiction to tobacco products, and Nestle, which offers stability due to its diverse food portfolio almost regardless of global growth prospects.
Best of all, Alpine delivers a $0.055 monthly dividend that, if kept unchanged, would equal $0.66 annually, or a yield of 16%. I'm not completely certain this yield is sustainable, but I would certainly say that a yield near 8% to 12% is, which is what makes this diversified dividend fund one to own.
In defense of this defense stock
Quick, hold on to something so you don't fall, because I'm going into rarely chartered territory again: defense companies. With a myriad of tax hikes and defense spending cuts set to take effect in less than two weeks, defense contractors have been cutting costs, and in some cases jobs, in order to prepare for spending triggers that would kick in on Jan. 2. However, that shouldn't stop Curtiss-Wright (NYSE:CW), a manufacturer of flow control products and provider of metallurgical processing services, from heading higher.
Admittedly, you aren't going to find Curtiss-Wright sporting game-changing technologies or capitalizing on double-digit growth rates. Instead, Curtiss-Wright's focus has always been on growing shareholder equity, and it's done so through relatively small acquisitions and reasonable organic growth expectations. Assuming a deal gets done, which I fully suspect, Curtiss-Wright can expect defense spending cutbacks to be far less than anticipated. Even if a deal doesn't get done, its metals business should improve rapidly enough internationally to offset whatever declines it may see in defense contracts.
History is also on Curtiss-Wright's side. Examining the company over the past decade and through two recessions, you'll notice that cash flow has almost consistently moved higher, as has book value per share -- all while margins have remained consistent. This is a smart management team and a well-positioned global defense and metal fabrication contractor that deserves more than a forward P/E of 10.5.
This week's theme is "How bad could it really be?" In the case of Great Panther, its mine upgrades at Guanajuato should boost fiscal 2013 results. For Alpine, with its largest holdings being well-diversified dividend producers, I have to think its downtrend is nearly over. Finally, Curtiss-Wright's decade-long earnings consistency speaks volumes to support the notion that it'll be just fine regardless of what gets done regarding the fiscal cliff.