The world's top value investors love it when their best stocks ideas are selling at bargain-basement prices. For those rarified investors, companies offering fire-sale prices become no-brainer buys.
So regular investors like you and me would do well to emulate the masters and look at companies offering a "buy one, get one" sale on their stocks. We'll pair the companies selling at least 50% below their 52-week highs with the insights of the top investors in the Motley Fool CAPS community. When top earthbound investors also like a company's prospects, it may be wise for us to take notice, too.
Naturally, you'll want to do more due diligence before buying. Low-priced appliances in the dent-and-ding section of your home-remodeling superstore might be there for more reasons than just a few scratches on the surface: Real trouble might be lurking below. Same thing here, so make sure there's nothing seriously wrong with the company before you plug it into your portfolio.
If you're going to tout a potential deal that will help you raise funds to pay down debt, you'd better come through. EXCO Resources (NYS: XCO) announced earlier this year that it was talking with an interested party about buying its stake in a pipeline project for $400 million that would help it pay down its heavy debt load. Like other independent oil and gas drillers ATP Oil & Gas (NAS: ATPG) and the recently IPO'd Chesapeake Granite Wash Trust (NYS: CHKR) , both of which are also off their highs by more than 50%, EXCO has found itself at the mercy of a market awash in natural gas.
It needs to seek joint ventures to fund its drilling program even as it expects to cut the number of rigs in operation by half this year. The price of natural gas has been obliterated as drillers drilled regardless of what it was doing to the industry, and after an exceptionally mild winter, they're reaping what they've sown. A year ago, natural gas was trading north of $5 per million BTUs; today it's below $2. And until gas prices recover, EXCO can't hope to return to profitability, so it needs to raise money -- either through asset sales or by bringing in others to help it out.
The sale it discussed in February apparently came to naught because the deadline expired and nothing was said of it again. I cautioned at the beginning of the month that there didn't seem to be a catalyst on the horizon to move EXCO's shares higher, and though some energy companies may come bounding back, I still don't see EXCO being one of them. Even though its stock is up almost 10% since I laid out my bear position, I think it's a temporary situation and will be maintaining my underperform rating on CAPS.
So add the natural gas specialist to your Watchlist and let us know on the EXCO Resources CAPS page whether you think it will survive the difficult market it finds itself in.
No Apple a day
Like the dragon Smaug jealously guarding his gold hoard inside Mount Erebor in Tolkien's classic The Hobbit, Thompson Creek Metals (NYS: TC) lies coiled around an enviable stash in Mount Milligan. It's estimated there are 6 million ounces overlaid on 2.1 billion pounds of copper. According to CEO Kevin Loughrey, it's going to be an exceptionally profitable operation that should net the miner around $450 million annually -- more if gold goes to $2,000 an ounce as many suspect.
If that doesn't sound like as much as you thought it would garner, it turns out Thompson Creek isn't quite dragon-like in its hoarding, instead signing a second streaming agreement with Royal Gold (NAS: RGLD) to adapt to a rising cost environment. So it retains a 60% stake in Milligan and raised $270 million in the process.
Rising costs have been the bane of the miner for a while, and it recently announced that it will experience a first-quarter operating loss because of higher production costs at its Endako mine, where expenses are going to come in at the upper end of previously provided guidance of $7.75 to $9.00 per pound of production.
As highly rated CAPS All-Star ScottyMax sees it, "If you are waiting around to see how TC is going to close their funding gap or if there will be any more cost overruns on Mt. Milligan you will be too late to [capitalize] on this sweet price."
Let us know on the Thompson Creek Metals CAPS page or the comments section below whether you think it spew forth an eruption of gold, and add it to the Fool's free portfolio tracker to be notified of any changes to its funding or cost estimates.
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. It's not just metal miners and tech shops that are setting the world on fire. Fool analysts think they've found a different kind of health care company with plenty of upside. You can read about it in their new free report, "Discover the Next Rule-Breaking Multibagger." Get your copy for free.
At the time thisarticle was published Fool contributorRich Dupreyholds no position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.
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