Just as we examine companies each week that may be rising past their fair value, we can also find companies potentially trading at a bargain price. 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.
Stay the course
One rule of investing I often need to remind even myself is not to allow short-term emotions to get in the way of long-term profit potential. Back in March, Japan suffered one of the most devastating earthquakes on record, taking countless lives and crippling many of the nation's largest corporations. Months later, many of these companies are still reeling from supply chain issues and negative near-term sentiment. The thing to remember is that Act of God phenomena are unpredictable and often have only a short-term effect on a stock's price. This is why I feel it's time to consider Toyota Motor (NYS: TM) .
Earlier today, Japan's Finance Ministry stated that exports in September grew by 2.4% over the year-ago period, marking the second consecutive month of year-over-year export growth. For years, Toyota has been running circles around U.S. automakers Ford (NYS: F) and General Motors (NYS: GM) , and this data may only confirm that what little territorial advantage the U.S. automakers did have post-tsunami may be disappearing. Toyota is a profitable, well-recognized brand name that has a history of out-innovating its American counterparts. Pessimists, you have been warned!
We don't often think of finding value in the gold sector, but that may be just what investors are getting by buying into Jaguar Mining (NYS: JAG) . Perhaps the only other metal miner even cheaper than my small cap to rule them all choice Golden Star Resources (ASE: GSS) , Jaguar is rapidly approaching its book value and trades at a mere 5.2 times Morningstar's estimate of Jaguar's forward earnings.
The reason Jaguar shares have taken such a hit relates to the company's preliminary third-quarter update released last week. In that update, Jaguar reduced its full-year output guidance from 200,000 ounces of gold to a range of 155,000 to 163,000 ounces. Despite this shortfall, there are still myriad positives. Gold production is expected to be up 20% over last year, quarterly revenue hit a new record, and cash operating margins of $806 per ounce are also a record. Jaguar should remain profitable even with its recent snafus, making this a potentially bargain-basement value in the gold mining sector.
Common sense will prevail
Sometimes a stock's precipitous fall can leave investors wondering when common sense will prevail. In the case of Nam Tai Electronics (NYS: NTE) , I can't say for certain if the stock has found a bottom, but with the company now trading for just pennies more than the net cash it has on its books, I'd be willing to predict that common-sense buying is right around the corner.
The electronics manufacturing and design systems company often finds itself at the mercy of macroeconomic trends in the electronics sector. Recently, weaker margins have hampered Nam Tai's profits, but even so, it remains solidly profitable and sports an enviable dividend yield north of 4%. Add in that the stock is valued at just 63% of book value and you have a recipe that any value investor would appreciate.
Keeping a long-term view on things and blocking out the short-term white noise is the key to seeing that these companies offer investors solid value at these levels. Keep your emotions out of your portfolio and good things are likely to follow.
What's your take? Are these stocks sells or belles? Share your thoughts in the comments section below and consider adding Toyota Motor, Jaguar Mining, and Nam Tai Electronics to your free and personalized watchlist to keep up on the latest news with each company.
At the time thisarticle was published Fool contributorSean Williamsowns shares of Golden Star Resources, but has no material interest in any other companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLongand on Twitter, where he goes by the handle@TMFUltraLong. The Motley Fool owns shares of Nam Tai Electronics and Ford.Motley Fool newsletter serviceshave recommended buying shares of Nam Tai Electronics, Ford, and General Motors. Try any of our Foolish newsletter servicesfree 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 adisclosure policythat's always on the lookout for a good deal.
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