13 Profitable Stocks that Hit 52 Week Lows Recently–Oct, 2013

The following 13 stocks have posted 52 week lows recently. Please note that since I have filtered for profitability, certain stocks that one might expect to be on this list (JC Penney, for example) are not listed.

Tip: Click on the stock symbol to go to its own page where you will find other recent articles I have posted that reference that stock. For some of the stocks, you will see that they also show up in other value screens I have run recently. These stocks should be the first ones you should pick up for deeper research.

Company Name Symbol Industry Price P/E P/B Div. Yield Market Cap
QC HOLDINGS INC QCCO Savings & Loans 2.38 42.5 0.49 8.40% 41.39
TITAN INTERNATIONAL INC TWI Rubber & Plastics 15.09 13.95 1.16 0.10% 807.90
GORDMANS STORES INC GMAN Home Furnishing Stores 11.30 13.61 2.02   217.59
AMERICAN EAGLE OUTFITTERS INC. AEO Apparel Stores 14.07 12.72 2.24 3.50% 2,710.00
DIAMOND OFFSHORE DRILLING INC. DO Oil & Gas Drilling & Exploration 62.41 12.48 1.85 0.80% 8,680.00
HIGHER ONE HOLDINGS INC ONE Business Services 7.82 12.3 5.17   365.23
TITAN MACHINERY INC TITN Specialty Retail 16.05 10.3 0.84   335.14
SKILLED HEALTHCARE GROUP INC SKH Long Term Care Facilities 4.30 9.98 1.61   168.71
ORTHOFIX INTERNATIONAL NV OFIX Medical Appliances & Equipment 21.00 9.92 1   408.51
CLOUD PEAK ENERGY INC CLD Coal 14.54 6.65 0.93   878.84
HUDSON TECHNOLOGIES INC HDSN Industrial Equipment Wholesale 2.04 5.35 1.32   51.14
ALON USA ENERGY INC ALJ Oil & Gas Refining 10.19 5.02 1.05 2.30% 636.35
DELEK US HOLDINGS INC DK Oil & Gas Refining 21.25 4.53 1.29 2.80% 1,280.00

Please note that Price is in $s and as of market close Oct 1, 2013 and Market Cap is in $millions

Why Look at Stocks at 52 Week Lows?

Often times, when investors throw in the towels and new lows are recorded, the stock may have sold off more than is rationally warranted. Scrapping the bottom can turn up great potential investments, either a classic undervalued security, a turnaround situation or a temporary business setback.

In other cases, the declines may be justified but cigar butts can be found (good for one last puff). I usually love cigar butts as they can be great low stress investments. Since they have already been given up for dead, the downside risk is pretty limited while positives of any kind can spark a brief rally. But you need to remain aware of why you bought this stock in the first place and be able to take advantage of any selling opportunity that might be presented to you. Not all such stocks are cigar butts though and there has to be a tangible reason why you believe there are potential gains in the future.

I mention “tangible reasons” and this is important. There has to be something that you can point to, either in the management discussion in the financial reports, industry developments, unrecognized but valuable assets, conference call transcripts, etc. that can become the basis for that one last puff. Just hope and prayer is not enough when a company is at the end of its life (if this is a distinct possibility for the stocks you are looking at in the bargain bin). You are looking for something that other investors might also recognize, if not today, than later (which is why you will get the brief rally). Also remember, if the company is actively destroying value, your holding period waiting for this value generating event is going to be short. For example, you might anticipate a significant monetary gain if a certain litigation goes the company’s way, however it may not make sense to wait for this to conclude for years if during the meantime the company continues to lose market share and destroys shareholder value. If you decide to buy a stock like this, make sure you set a finite holding period limit, after which you will exit if things do not pan out.

One Recent Example of a Cigar Butt Stock from VSG Portfolio

From the recent history in the Value Stock Guide portfolio, MAXY – Maxygen was a potential cigar butt. The company was in the process of liquidating and voluntarily going out of business but it had a patent that could have paid off handsomely if they could find a buyer. The tradeoff here was that the longer they stayed in business looking for a buyer, more expenses they would have incurred with no revenues coming in. So it was important to decide how long you are willing to wait to see if this potential cash generating event takes place. The risk in this investment was pretty low as with cash assets and no operations, there was nothing the management could do to destroy shareholder value through incompetency or design while they shopped this IP around.

Ultimately, the fortune building event did not come to pass and we exited with some minor gains. The company has since completed its liquidation and is not longer listed.

As usual, do your due diligence.

Comments

  1. Bhargava says

    Very well written article shailesh. I think in a very similar way and always looking for quality/profit making stocks which hit 52-week low. Of course I analyze the reasons for the downfall and if I like I jump in. Thanks for sharing your research with us.

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