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 and 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 a pair of 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)
|Central European Distribution (NAS: CEDC)|
|North American Palladium (ASE: PAL)|
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.
Shareholders of Polish vodka distributor Central European Distribution raised their glasses and toasted "Nostrovia!" as Russian Standard continues to up the ante -- and its stake -- in the business. A few months ago the Russian spirits distributor agreed to buy as much as a quarter of the company that caused a surge in its stock, and earlier this month it boosted its offer to buy 33% of the outstanding shares. Yet even as CED's stock gained 36% in the past two weeks alone on the basis of the offer, shares of the spirits distributor are still more than three-quarters below their 52-week high.
Although best-known for its vodkas, CED says whiskey is catching on in Poland, and it recently inked a separate agreement with Beam to distribute Jim Beam bourbon, Maker's Mark whiskey, and Sauza tequila. According to the distributor, the Polish whiskey has tripled in size over the past five years. Whether Poles will be dropping "Jager Bombs" remains to be seen, it does give CED an opportunity to expand the portfolio of offerings. In recent quarters, it's been losing ground to Diageo's (NYS: DEO) mix of Smirnoff, Ketel One, and Ciroc vodkas.
With 96% of the more than 650 CAPS members rating Central European Distribution to outperform the broad market indexes, it's clear they think it will still be able to get its drink on. Add the spirits distributor to your watchlist to see if there will be further reason to raise your glass to Russian Standard's acquisitive ambitions.
Letting sleeping dogs lie is a good strategy for not getting bit, but when you let your Sleeping Giant gold mine sleep it signals big trouble. North American Palladium hoped the gold project would allow it to diversify its operations a bit so that reliance upon a still-sketchy auto industry would be lessened, but after two years of trying to make it economical let alone profitable yielded little results. NAP is mothballing the project, though the mill will continue to operate.
Recently, Stillwater Mining (NYS: SWC) paid a rich premium to get at gold deposits owned by Peregrine Metals. Investors were none to pleased with the purchase price, though, and it remains to be seen if the copper assets will be worth the pretty penny paid.
North American Palladium still has the Vezza gold mine it bought from Agnico-Eagle Mines (NYS: AEM) a few years back, and it expects to begin commercial production in the second quarter. With cash costs at $1,150 an ounce, however, it doesn't have as much of a cushion as those miners that sport cash costs in the hundreds of dollars.
An improving economy and more robust auto sales would certainly brighten the palladium miner's prospects, says CAPS member Dan22italy, and if it paid a dividend, it would be icing on the cake. As a shareholder myself, I'd be happy for any of those outcomes, but let us know on the North American Palladium CAPS page what you think the probability of that occurring is, and add the stock to the Fool's free portfolio tracker to be notified if it puts any other assets to sleep.
Have half a mind
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At the time this article was published Fool contributorRich Dupreyowns shares of North American Palladium, but he holds no other position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of Diageo.Motley Fool newsletter serviceshave recommended buying shares of Beam and Diageo. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.