At this time of year, it makes sense to seek out select stocks trading near 52 week lows. The strategy of buying beaten-down stocks just a few weeks before the end of the year often results in solid gains, because stocks that many investors have lost money on are often sold down even more than they should be for tax loss purposes. Sometimes, after holding a stock that has dropped in value, investors want to sell even if it's not a great time to do so. This occurs out of pure frustration, a desire to cut losses, and a desire to harvest tax losses in order to offset gains on other stocks. The tax loss selling can exacerbate the declines in an already oversold, undervalued stock at this time of year, and that can be an opportunity. I have researched a number of companies that fit the profile for a strong stock surge in January. In addition, these stocks are all trading below $7 per share and could see very large percentage gains due to the low price per share. Here are a few stocks that have had a tough year, but should rebound into 2012:
RAIT Financial Trust (RAS) shares are trading at $4.51. RAIT is a real estate investment trust, based in Pennsylvania. These shares have traded in a range between $2.90 to $11.34 in the last 52 weeks. The 50-day moving average is $4.37, and the 200-day moving average is $5.58. RAIT focuses on commercial real estate, which is healthier than the residential market. A dividend of 24 cents per year is paid, which is equivalent to a 5.2% yield. This stock trades at a significant discount to the book value, which is currently stated at $22.83. This stock is trading for less than half the 52 week high, and this makes it a likely candidate for a January rebound.
Magnum Hunter Resources (MHR) is trading around $4.60. Magnum is a independent oil and gas company, based in Texas. These shares have traded in a range between $2.33 to $8.66 in the last 52 weeks. The 50-day moving average is $4.31, and the 200-day moving average is $5.90. MHR is estimated to lose about 14 cents per share in 2011 and earn about 6 cents in 2012. Magnum controls about 46,000 acres in the Marcellus Shale region as well as exposure to the Eagle Ford and Bakken. Magnum shares reached 52 week highs earlier this year, but some investors are probably selling to harvest tax losses now. When the tax loss selling is over in January, this stock could rebound.
MEMC Electronic Materials (WFR) is trading at $4.42. MEMC is a maker of silicon wafers for semiconductor and solar use. These shares have a 52 week range of $3.85 and $15.04. The 50-day moving average is $5.09 and the 200-day moving average is $8.26. Estimates for WFR are about 41 cents per share in 2011 and 60 cents in 2012. Margins for the solar industry have been impacted by excess inventory and economic concerns. However, this stock is trading for less than a third of its 52 week high, and many investors have lost money in 2011. This makes WFR a strong candidate for gains in January.
MGIC Investment Corp. (MTG) is trading around $3.78. MGIC is a surety and title insurance company and is based in Wisconsin. The 50-day moving average is $2.64 and the 200-day moving average is $5.16. These shares have traded in a range between $1.51 to $11.79 in the last 52 weeks. Earnings estimates for MTG are for a loss of about $1.86 in 2011 and a smaller loss of about 3 cents in 2012. This stock has plunged and recently hit new 52 week lows over concerns that the housing crisis will continue. MTG shares are starting to rebound but could see further gains in early 2012. Buying on dips should pay off in January.
Accuride Corp. (ACW) is trading around $6.44. Accuride is a manufacturer of commercial vehicle parts. The 50-day moving average is $6 and the 200-day moving average is $10.31. These shares have traded in a range between $4.35 to $16.34 in the last 52 weeks. ACW is estimated to lose about 13 cents per share in 2011 and earn about 73 cents in 2012. After the company announced weak results, this stock dropped about 50% and hit new 52 week lows not long ago. Insiders have been buying recently, and this stock is poised for gains once tax loss selling ends.
Genworth Financial, Inc. (GNW) is trading at $6.75. Genworth provides a variety of insurance and financial products like annuities, long-term care, mortgage insurance, etc. These shares have a 52 week range of $4.80 and $14.77. The 50-day moving average is $6.15 and the 200-day moving average is $8.96. GNW has earnings estimates at 45 cents per share for 2011, and $1.27 for 2012. Continued mortgage insurance losses have caused concerns and GNW shares have had a rough year in 2011. This sets this stock up for probable gains into January.
JA Solar Company, Ltd. (JASO) trades at $1.62. JA Solar manufactures solar products and is based in China. These shares have traded down from a 52 week high of $8.57, and recently hit new lows of $1.40. The 50-day moving average is $2 and the 200-day moving average is $5.12. JASO has estimates for losses of about 16 cents per share for 2011 and 15 cents for 2012. JASO has a book value of $6.35. Solar has been one of the worst performing sectors, and while the fundamentals for the industry are still less than ideal, this stock could see some rebound soon.
The data is sourced from Yahoo Finance and Insidercow.com. The information and data is believed to be accurate, but no guarantees or representations are made. Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for informational purposes only.