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.
A lustrous opportunity
Is this the end of the fairy tale rally for gold and silver? You might think so, given that widely followed gold bull Dennis Gartman announced that he had sold out of his entire gold position, predicting a greater chance at weakness than strength at this point. This action, along with several analysts warning investors to exercise caution, has led gold and silver down rather sharply. I, on the other hand, don't feel it's time to give up on the individual miners just yet, especially silver miner Pan American Silver (NAS: PAAS) .
Mining stocks in general have greatly underperformed the metals they produce, but that trend could be about to change. Thankfully for shareholders of a select few companies, including Silver Wheaton (NYS: SLW) and the aforementioned Pan American Silver, the cash positions in these stocks are growing, and debt is either reasonable or in Pan American's case almost nonexistent -- $42.7 million compared to $485.1 million in cash. Pan American's valuation relative to its P/E, cash flow, and book value also has my mouth watering. It's currently trading at valuations well below its five-year averages, and I'd argue that the stock is as cheap as it has ever been. Do yourself a favor and give this shiny silver miner another look or you might wind up regretting it.
What banking crisis?
Perhaps someone forgot to tell Bank of Montreal (NYS: BMO) that there's a crisis of confidence spreading throughout the banking sector. Despite slowly trickling toward a new 52-week low, the Canadian banking giant wrapped up another impressive year of growth in early December when it reported its year-end results.
For the full year, Bank of Montreal recorded an 11% jump in earnings per share and a 40-basis-point jump in return on equity. Nearly every aspect of the bank's business saw strong growth, with U.S. deposits climbing by $34 billion and the company's personal and commercial banking division reporting record income. Let's also not forget that Bank of Montreal boasts an impressive dividend north of 5% while other large North American money center banks like Bank of America (NYS: BAC) and Citigroup (NYS: C) and their sub-1% yields won't get close to that figure for a long time. Finally, you have the safety in knowing that Canada's banks, while not completely free of the risks associated with carrying European sovereign debt, are well known for their conservative investment practices. Add this up and you have what I feel is a very stable bank to place in your portfolio and forget about for a few years.
Investing in the market is itself a gamble, but what about investing in a company that makes money from your urge to gamble? Wynn Resorts (NAS: WYNN) , the creme de la creme of the Las Vegas gambling scene, has hit a patch of bad luck ever since it reported fourth-quarter results that included its first EPS miss in quite some time. Should you cash in your chips on this growth story? Not just yet!
As I see it, Wynn's quarter missed the mark by $0.13 because its Las Vegas casino only won money on 18.3% of wagers as opposed to 22.8% of wagers in the year-ago period. If you take out this anomaly, you'd see a company that reported earnings in line with expectations. Revenue rose by a ridiculous 30%, with its Macau revenue climbing a robust 42%. I'd hardly call this quarter a failure considering that Wynn reversed a year-ago loss, but that's how Wall Street seems to have perceived it. I personally would dare any Wall Street analyst to find a better-run casino that can grow at even half the rate Wynn can. It's the premier name on the strip and it's a vice stock that you may want to roll the dice on in your personal portfolio.
That's two weeks in a row I've been able to find a good mix of growth and value hovering around fresh 52-week lows. Despite these wild market gyrations, good companies are being left out in the cold. Keep your eyes peeled for these prospective values!
In the meantime, consider adding these potential winners to your free and personalized watchlist and get your own personal copy of our free report, "The Motley Fool's Top Stocks for 2012," and see what our analysts have dubbed the "must-own" company for the new year.
Add Pan American Silver to your watchlist.
Add Bank of Montreal to your watchlist.
Add Wynn Resorts to your watchlist.
At the time thisarticle was published Fool contributorSean Williamsowns shares of Bank of America, but has no material interest in any other companies mentioned in this article. He is a sucker for the roulette table despite its terrible odds. You can follow him on CAPS under the screen nameTMFUltraLong, track every pick he makes under the screen nameTrackUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong. The Motley Fool owns shares of Citigroup and Bank of America. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't 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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