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. Following you'll find three companies whose shares are selling at least 50% below their 52-week highs but that 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
|Amarin (NAS: AMRN)||****||62%|
|Sequenom (NAS: SQNM)||****||51%|
|Synovus Financial (NYS: SNV)||****||51%|
Source: Motley Fool CAPS.
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.
Standard of excellence
Fish-oil salesman Amarin isn't content with its high-triglyceride therapy being the sole indication for its use; the biotech wants the FDA to expand AMR-101 to also be used as a treatment for the reduction of cardiovascular events like heart attacks and strokes. The FDA will require new testing, but the regulatory agency has already approved its new trial design, and Amarin is enrolling patients in the trials. It's now just waiting on its triglyceride therapy application.
Investors are concerned, however, that AMR-101 might not be as novel as the company suggested, since it was rejected once again by the U.S. Patent Office, according to TheStreet.com. While that has depressed the stock price, it could also be an opportunity for risk-tolerant investors who believe Amarin will ultimately gain a measure of patent protection from generics.
CAPS member baselineace still doesn't agree that its valuation is justified at current levels because it has no products on the market yet, but 92% of the CAPS members rating the biotech think the general positive outlook analysts have for AMR-101 means its future prospects support the potential. Add Amarin to your watchlist and see whether the fish-oil therapy will end up just being snake oil to investors.
Sequenom got a quick bounce last month from the news it replicated the data for its Down syndrome test that mired the company in controversy after it was revealed that an overly zealous employee compromised the results. The test remains a much safer alternative than amniocentesis, so I am still convinced it will gain a large share of the market as doctors use it over alternatives. It's why I've rated Sequenom to outperform the broad indexes on CAPS.
Moreover, the company isn't a one-trick pony, as it has other products on the market generating revenues, and they came in 16% higher than a year ago in the third quarter, though they were below analyst expectations. Losses, while narrowed to $0.19 a share, were a penny worse than Wall Street's forecasts, which had the market sending Sequenom's shares down.
Although its other projects are propping it up at the moment, the future of the company really hinges on what happens with the MaterniT21 test. At the least it's the major catalyst for it.
Investors should also ignore other market noise, such as when genetic-testing-equipment maker Illumina (NAS: ILMN) warned about research funding levels. That announcement sent Thermo Fisher Scientific (NYS: TMO) and others in the sector lower, but simply being in the same industry doesn't mean Sequenom will be affected. It ought to focus solely on how its trisomy 21 test fares in the market.
With 92% of the CAPS members also rating this biotech to beat the Street, tell us on the Sequenom CAPS page or in the comments section below if you agree, and then follow its progress by adding it to your watchlist.
Canary in a coal mine
Surprising everyone with its first profitable quarter in three years, Synovus Financial was able to positively say its plan of closing underperforming bank branches, cutting jobs, and raising capital has successfully put it back on to the road to health.
Improving credit trends gives management hope that the worst is behind it, but let's not forget it still has a full year of losses to contend with. It was a pretty deep hole it had to dig itself out of, so while Synovus has been trending in the right direction, it now needs to build on that foundation.
A lot of its gains in the quarter were a result of some smart investment decisions, with earnings strengthened by a $63 million securities gain. Yet that also can be a fleeting benefit; much better are the large reductions in non-performing assets that dropped 25% year over year and the decrease in net charge-offs.
Wilmington Trust, for example, wasn't able to make the same kind of U-turn and was bailed out by M&T Bank (NYS: MTB) , which bought it this past May. Sterling Financial (NAS: STSA) has been working to stabilize itself after the housing-market collapse and just announced that it would be buying Pacific Northwest community banking specialist First Independent Bank (will that now make it First Co-Dependent Bank?).
Synovus isn't out of the woods yet, but as CAPS member larrysd1 notes, "A strong company with good management can overcome obstacles." Add the regional banker to the Fool's free portfolio tracker to see whether it's near an inflection point to capture greater growth ahead.
Have half a mind
Sign up today for the completely free CAPS service, and tell us whether these stocks are twice as good at half the price. Weigh in with your own thoughts on which stocks you think can keep the dogs at bay.
At the time this article was published Fool contributorRich Dupreyholds no position in any company mentioned. Check out hisholdings and a short bio.Motley Fool newsletter serviceshave recommended buying shares of Illumina and Thermo Fisher Scientific. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.