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. Here 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
|ArcelorMittal (NYS: MT)||****||51%|
|Palomar Medical Technologies (NAS: PMTI)||****||50%|
|Skyworks Solutions (NAS: SWKS)||****||57%|
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.
Stock of steel
Shaky global finances will continue to weigh heavily on global steel-producing stalwarts such as ArcelorMittal, POSCO, and U.S. Steel (NYS: X) , according to the World Steel Association. It says while production has increased strongly almost across the board in 2011, next year we'll be seeing much more moderate growth, with big differences in growth across various regions.
Even China, a country that has been an engine of demand, will see lower rates of expansion, going from 7.5% this year to 6% next. And although other parts of the emerging world show continued strength, slowdowns in Japan and Europe will put a crimp on growth in steel use.
That's leading some individual steel producers to cut back on capacity, and ThyssenKrupp expects continued losses in its Steel Americas business while experiencing volume declines in Europe. ArcelorMittal is the world's largest steel producer, accounting for 6% of global production, and therefore could see pressure from those trends as well.
Nevertheless, ArcelorMittal's global reach attracts CAPS member Raylanw.
It's not pinned down to one geographic region or operation. An undervalued, diversified company AND I get a yield above 3%? I'm in.
Add ArcelorMittal to your watchlist to steel yourself from financial chaos overseas.
Looking better every day?
In an economy still haunted by 9% unemployment -- ignore that 8.6% figure just released; the labor force shrank, so the numbers just seem better -- elective treatments for aesthetic reasons become a tough sell. That helps explain not only why Palomar Medical Technologies has seen its shares fall so much, but also why Syneron Medical (NAS: ELOS) , Cynosure (NAS: CYNO) , and Cutera are all well off their highs. Aesthetic procedures are not a high priority now.
Having to convince doctors to shell out big bucks for their equipment is difficult in such times. Palomar did report a 12% increase in product revenues in the quarter, showing that its business isn't hemorrhaging anymore, but that's still far below the sales it recorded a few years ago in the industry's heyday. Yet it owns some of the industry's most important patents -- it earned a one-time $34 million settlement from Syneron in the quarter related to a patent infringement suit, helping to bolster its bottom line.
There was a time when I was focused like a laser on Palomar and the industry (and chose the wrong horse to ride), but the time is not yet ripe for a full recovery, so I've marked the aesthetic-laser maker to underperform the broad market indexes. Tell us on the Palomar Medical Technologies CAPS page or in the comments section below whether you agree, and then follow its progress by adding it to your watchlist.
Falling from the sky
The long-simmering feud between Skyworks Solutions and Advanced Analogic Technologies (NAS: AATI) seems to have drawn to a close, with the chipmaker deciding to acquire the power-management specialist for a price lower than it originally bid.
Back in September, Skyworks said AAT was not living up to its end of the bargain, which AAT denied. Things fell apart from there, with Skyworks even threatening to walk away from the deal. In the process, AAT's stock cratered at the thought of the unraveling of the merger, but now it seems the tough talk worked. Skyworks will pay $5.80 a share cash for AAT, as opposed to the $6.05 in cash and stock it originally offered.
Skyworks has ridden the Apple iPhone gravy train, providing the smartphone with power amplifiers for its 3G signals. It believes Advanced Analogic will give it entry into the power-management business that's exploding with demand for smartphones.
With the acrimony smoothed over, I see Skyworks as being able to outperform the market and have indicated as much on CAPS, putting me in the company of 95% of the 660 members who've also weighed in on the chipmaker. Add Skyworks Solutions 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. The Motley Fool owns shares of Apple and Arcelor Mittal.Motley Fool newsletter serviceshave recommended buying shares of and creating a bull call spread position on Apple. 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.