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.

This isn't the Titanic
I hope you're sitting down for this, because the first company on the suggested buy list this week is a Greek shipping company. Go ahead, laugh it up; get it all out of your system before we continue.

Dry bulk shippers of all forms have had numerous problems. The Baltic Dry Bulk Index, which helps determine charter rates, has plummeted from around 11,500 at its peak to a current value around 750. Many shippers simply aren't bringing in enough to cover their costs, and companies like DryShips (Nasdaq: DRYS) expanded beyond their means when times were good and now are drowning under a sea of debt. If not for its drilling business, it's possible DryShips could have gone under years ago.

Today, I want to highlight Diana Shipping (NYSE: DSX) , which has remained profitable even during these multiyear lows in the BDI. There are a lot of factors about Diana Shipping that make me like the company, including its ability to cut year-over-year expenses, the fact that it boosted fleet utilization 100 basis points to 99.6% in the most recent quarter, and that it remains net cash positive by $34 million even with the BDI near a multiyear low. As a long-term play on shipping, Diana appears to be the safest play.

Don't delay, buy today
Let's face it, none of us particularly appreciates marketing companies, and we tend to avoid advertising at all costs. However, finding a way to get you to view ads is all that QuinStreet (Nasdaq: QNST) does.

QuinStreet is a vertically integrated marketing company that primarily services the education and financial services industries and uses a combination of cost-per-click search and opt-in email for its clients. As you can imagine, its business is highly cyclical and dependent on the health of the economy. With increasing government regulation in the education sector, and many financial services just now getting back on their feet, QuinStreet's growth hasn't been without its hiccups. But now could be the time to pounce.

QuinStreet hasn't been this cheap in a while, trading at 10 times forward earnings and valued right around its book value. The company continues to be cash flow positive and has moderately reduced its debt and increased its cash position since 2008. My thinking is that if QuinStreet can perform this well in such poor economic conditions, imagine how strong it'll be when educational spending ramps up. With EBITDA margins hovering around 20%, I'm not going to delay in adding QuinStreet to my CAPS portfolio.

Digging deep
Just as investors often overestimate the success of stocks to the upside, the overwhelming pessimism in the coal sector has me thinking that we've got to be very close to a bottom. From a thermal coal perspective, natural gas prices have risen considerably and coal is no longer that costly of an energy source. In terms of metallurgical coal, the coal used to strengthen steel, China recently made a $156 billion commitment to upgrade infrastructure within the country. That's great news for met-coal companies like Walter Energy (NYSE: WLT) .

Unlike Walter's peer CONSOL Energy (NYSE: CNX) , which cut production and its workweek in order to rein in costs, Walter hasn't needed to drastically reduce its output. With China and India remaining very coal-dependent in terms of energy generation, Walter's going to be a busy bee trying to keep up with export demand over the next decade as both countries continue to grow.

The coal sector will not be without its hiccups, but met-coal's future appears well intact. With Walter Energy now trading for just below book value and nine times forward earnings, I'm going to dig deep on the value front.

Foolish roundup
This week's theme is "It can't stay this way forever." What that means is that we'll always need metallurgical coal, we'll always need shippers, and there will always be a place for vertical advertisers. Current economic conditions may not favor those companies, but long-term, these three look to be in great shape.

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!

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