As the S&P 500 (SPY) hovers around the 1400 level, after sinking as low as 1277 just a couple months ago, many investors have been left on the sidelines. Those investors are wondering if they should jump in and chase the rising prices or if they should wait for a correction before buying back into the market. Well, there's another option.
There are still stocks that have performed terribly over the past year. Below I have listed and graphed 7 stocks trading at or near their 52-week lows. (Note: This is not a buy recommendation - this screen is meant as a first step in the due diligence process. My aim is to help investors narrow their search before they conduct in-depth research.)
| Ticker | Company | Industry |
| (ACH) | Aluminum Corporation Of China Limited | Aluminum |
| (AMD) | Advanced Micro Devices, Inc. | Semiconductor - Broad Line |
| (CZR) | Caesars Entertainment Corporation | Resorts & Casinos |
| (DELL) | Dell Inc. | Personal Computers |
| (HMY) | Harmony Gold Mining Co. Ltd. | Gold |
| (MRVL) | Marvell Technology Group Ltd. | Semiconductor - Integrated Circuits |
| (VIV) | Telefonica Brasil, S.A. | Wireless Communications |
So, despite the rising tide, some boats are sinking. But as an investor I'm intrigued by the steep declines (ranging from -19% to -53%) over the past year. I love buying decent-to-good companies that are temporarily unloved at a good price. And if I can get paid to wait (i.e. receive a dividend), all the better.
First looking at valuations, it appears that AMD, DELL, HMY, MRVL and VIV are reasonably priced, given P/S, P/B and forward P/E ratios. (Note: I am suspicious of the data for VIV since the historical and forward P/E ratios are identical. However, I didn't delete the stock since it's an interesting play on the Brazil economy and is trading near a 52-week low.)
| Ticker | P/E | Forward P/E | P/S | P/B | P/Cash |
| ACH | 138 | 80.5 | 0.2 | 0.64 | 3.13 |
| AMD | 8.65 | 0.4 | 2.37 | 1.67 | |
| CZR | 23.16 | 0.3 | 1.7 | 10.46 | |
| DELL | 6.27 | 5.82 | 0.3 | 1.9 | 1.56 |
| HMY | 14.23 | 8.9 | 1.9 | 0.91 | 17.06 |
| MRVL | 13.19 | 9.07 | 1.7 | 1.19 | 2.68 |
| VIV | 7.27 | 7.27 | 2.4 | 1.65 | 17 |
Looking forward, the growth expectations for ACH, HMY and MRVL appear quite optimistic. I would, however, take 'expectations' with a grain of salt since 1) expectations change, and 2) expectations can be wrong. Still, it's interesting to see that many people out there expect some of these companies to grow, despite their falling stock prices.
| Ticker | EPS growth next year | EPS growth next 5 years |
| ACH | 340.00% | 77.50% |
| AMD | 53.57% | 7.03% |
| CZR | 24.30% | |
| DELL | 2.82% | 4.90% |
| HMY | 1.05% | 35.20% |
| MRVL | 15.46% | 14.60% |
| VIV | 4.26% | 0.50% |
Looking at financials (rather than expectations), how are these companies performing now? I'd say DELL and VIV stand out as strong contenders, with decent ROA, ROE and operating margins.
| Ticker | Return on Assets | Return on Equity | Operating Margin |
| ACH | 0.46% | 0.46% | 2.46% |
| AMD | -12.26% | -45.61% | -4.61% |
| CZR | 1.13% | 2.90% | 11.40% |
| DELL | 7.06% | 33.45% | 6.30% |
| HMY | 4.63% | 6.00% | 13.47% |
| MRVL | 8.12% | 9.43% | 13.48% |
| VIV | 11.44% | 21.61% | 21.20% |
Will any of these stocks pay me to wait for the stock price to recover? According to the table below, HMY, MRVL and VIV all have reasonable dividend yields with fair payout ratios. These companies meet my preferred characteristics. However, other investors may be willing to hold beaten-down companies regardless of their dividend.
| Ticker | Dividend Yield | Payout Ratio |
| ACH | 0.91% | 0.00% |
| AMD | n/a | n/a |
| CZR | n/a | 0.00% |
| DELL | n/a | n/a |
| HMY | 1.42% | 18.56% |
| MRVL | 2.36% | 14.59% |
| VIV | 4.61% | 81.86% |
Data source: Finviz
Investors sitting on the sidelines who feel like they missed this rally may yet have an opportunity to acquire some bargains.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: This is not advice. While the author makes every effort to provide high quality information, the information is not guaranteed to be accurate and should not be relied on. Investing involves risk and you could lose all your money. Consult a professional advisor before making any investing decisions.
