3 Top Stocks at Half-Price
You love buying your shirts when they go on sale. And who can resist a buy-one-get-one-free offer? So when our stocks go on sale, why do we bemoan their low prices?
Smart investors like Warren Buffett or Marty Whitman love it when their stocks are suddenly selling at bargain-basement prices. For them, these companies become no-brainer buys.
The investors in the Motley Fool CAPS community also like a bargain, apparently. Below, you'll find three companies whose shares are selling at least 50% below their 52-week highs, but which still earn high honors from our investor-intelligence database. Consider it a BOGO sale on stocks.
CAPS Rating(out of 5)
% Off 12-Month High
|Insmed (NAS: INSM)|
|Micron Technology (NYS: MU)|
|U.S. Steel (NYS: X)|
Naturally, we want you to look a bit closer at these stocks before buying. You can get low-priced appliances in the dent-and-ding section of your home-remodeling superstore, but their quality might not be so good. Same thing here: Make sure there's nothing seriously wrong with the company before you plug it into your portfolio.
Take two, they're small
After the FDA forced Insmed to put on hold its lung-infection therapy Arikace until it could examine more closely how it affects rats, the biotech indicated that it's looking forward to getting its trials back on track sometime during the fourth quarter of this year, which suggests that it's hopeful that the FDA will respond soon to the data it was given. Of course, that could be just a lot of wishful thinking, but management has said that after it reviewed the data it's fully confident Insmed will be able to start up testing again.
Assuming it does get the green light and is able to eventually make it to market, Insmed still faces a fairly competitive landscape. Novartis has its twice-a-day Tobi therapy for cystic fibrosis and Gilead Sciences (NAS: GILD) offers Cayston, an inhaled antiobiotic, which it says performs better than Tobi in head-to-head trials. For that matter, Arikace offers up a better profile than does Tobi since it's a once-a-day treatment.
Regardless there's still a long slog for Insmed to trek through, but investors are generally supportive of the biotech. CAPS members generally think it can outperform the broad indexes in the future as its stock works its way higher again, with 94% giving it the thumbs up. And while just 82% of the All Stars weighing in have a similarly positive outlook, it's still a fairly loyal group.
Add Insmed to the Fool's free portfolio tracker to see whether the FDA gives it the green light or brings it to a screeching halt.
It's been a long road down for chipmaker Micron Technology, as its stock has been halved over a disappointing summer slide, but look for it to be among the last men standing at the end of the day. It is a member of a select few among chip companies that's actually still turning a profit (Samsung and Hynix Semiconductor are the only others in the black), even if margins are constrained by falling DRAM prices.
The decline of the PC market since the introduction of the iPad has added to the woes of the industry and analysts are looking for a wave of consolidation to shore up sagging fundamentals. CAPS member bosstocks finds Micron's ability to generate significant cash flows, even in the face of falling prices, to be an indication of the quality and long-term nature of a holding in the chipmaker.
Cash is king when it comes to business, and Micron is sitting a top the throne. I know NAND and DRAM prices are expected to decrease and affect revenues, but I also find it comforting MU drives a large portion if its revenues from its enterprise solutions. As Micron has demonstrated over the past 3 years, its expanded product lines have developed it into a more mature cash cow type of business. I believe with another 1 to 2 years of positive FCF the street will value the company more appropriately for what it is.
Add the chipmaker to your watchlist to see if its cash horde will prove it is king, and let us know on the Micron Technology CAPS page how you think it will fare in its legal battles against Rambus (NAS: RMBS) .
Steel yourself for trouble
Despite the wild gyrations and a few back-to-back days of better than 100-point gains in the market this month, stocks still trade 6% lower than where they started August. A lot of that has to do with concern over the global economy, which appears to stand on wobbly legs and could still fall. That's going to continue pressuring steel companies that count on hopes for an economic turnaround to spur their own advance.
Along with U.S. Steel, the steel industry has been taking its lumps and the CAPS Steel sector is down over 7% for the month. AK Steel (NYS: AKS) has also been nearly cut in half from its recent highs and Arcelor Mittal (NYS: MT) is down almost 30% in August alone. Iron ore prices are expected to remain high, and with little demand for steel products analysts aren't expecting any significant moves in steel pricing. U.S. Steel expects to see sales decline in the third quarter for flat-rolled products while shipments will be flat with what it achieved in the second quarter (which was done 6% from the first).
CAPS member tigermathur thinks the steelmaker maker is strong enough to weather the economic storms.
X is trading at its 52 week low and has been pulled down due to the downward market forces, the fundamentals of the company remain strong. The demand for steel is strong and the stock should bounce back on the next market uptick
Monitor how well U.S. Steel fares down the road by adding the stock to the Fool's free portfolio tracker.
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At the time this article was published Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Gilead Sciences and Novartis. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.
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