3 Stocks Near 52-Week Lows Worth Buying

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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.

Give me fuel, give me fire
I won't often advocate buying into a stock so shortly after a company accident, but the fire at Eagle Rock Energy Partners' (NAS: EROC) Texas facility is exactly the buying opportunity investors should be salivating over.


Eagle Rock, a limited partnership that's involved in gathering, treating, processing, and transporting natural gas and liquefied natural gas, has been crushed recently by the huge drop-off in natural gas prices -- then again, what natural gas company hasn't? Despite the 27% drop in average selling price in its latest quarter, Eagle Rock still grew its adjusted EBITDA and cash flow, and more importantly, boosted its dividend by 5%.

The fire at its processing facility will be a short-term detriment to the company, but considering the strength behind LNG sales and pricing, I'm willing to overlook some short-term weakness. Assuming Eagle Rock leaves its dividend unchanged, it will be paying out a tidy 9.6% yield while trading at a reasonable 17 times forward earnings. That's a desirable value for income-seeking investors.

Fueling America's growth
I'll be the first to admit that energy investment funds are far from exciting. But that's not going to stop me from suggesting you take a much closer look at NGP Capital Resources (NAS: NGPC) , an investment firm that has lent millions to 14 different oil and gas exploration companies in exchange for interest and royalty payments.

I can't say I agree with NGP Capital's entire portfolio, as it does have a limited-term loan to deepwater driller ATP Oil & Gas (NAS: ATPG) , which is simply struggling to manage its high interest payments. But overall, NGP's investments are returning a steady rate of cash flow to investors. Many on Wall Street abandoned ship in March when the company cut its dividend by 33%, but this was just a reaction to earnings returning to normalized levels from an abnormally strong performance in 2011. Even with an annualized dividend of $0.48, NGP's yield still clocks in just north of 8%, and the company is trading at just 10 times fiscal 2012 earnings despite calls from management that earnings growth will reaccelerate when the collected profits from last year are redeployed later this year. Income investors, are you paying attention yet?

Black gold, Texas-sized dividend
Stop me if you've heard this one before: I like coal! The best time to be greedy is when others are fearful, as Warren Buffett has professed, and no sector has seen its fair share of pessimism recently more so than the coal sector. Decade-low natural gas prices have electric utilities switching to gas for power generation and leaving the coal mines with excess stockpiles of product.

But coal is also the most prominent energy-generating fuel in our country, and it's not going to disappear quietly into the night. Alliance Resource Partners, which has grown its income for 11 straight years, is a limited partnership I've mentioned before as a more stable way of investing in the coal sector. Today, I want to add a new name to the list: Natural Resource Partners (NYS: NRP) .

The limited partnership, which receives some oil and gas royalties in addition to coal reserve royalties, has seen its earnings come under pressure as its interests have curbed production. The one bright spot has been domestic metallurgical coal demand, which has remained strong. With a better second-half forecast offered by management, Natural Resource Partners' 9.5% yield coupled with its forward P/E of just 13 make it an exceptional company worth mining through further.

Foolish roundup
Dividend investors, this week's for you! High-yield stocks don't often get the attention they deserve, but that doesn't make them any less valuable. All three of these stocks could provide a complete dividend payback (assuming the dividends are reinvested) in just eight to nine years. This doesn't even take into account the long-term fundamental strength I see behind each of these businesses. I'm so confident that 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 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!

At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He's a sucker for a solid dividend. 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.Motley Fool newsletter services have recommended buying shares of Alliance Resource Partners. 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.

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