• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

Separating the Bargains From the Busts

The list of stocks making 52-week lows includes some great buys but also some hard cases.
By SHAM GAD Nov 19, 2012 | 02:00 PM EST
Stocks quotes in this article: DELL, HPQ, SMRT

I've heard many people judge the market by the 700-point drop in the Dow since the U.S. elections ended. Somehow it has become easy to blame the drop on that event. Perhaps a 100%-plus advance in equities in the past four years against the backdrop of slow economic growth and unprecedented monetary stimulus may also be forces to blame. 

In any event, since I am very poor at timing markets, I simply use times like this to watch oversold names and moves by big-name investors. While Mr. Market is taking a little vacation, what better time to take a step back and pay a little less attention to headlines and more attention to prices? 

Not surprisingly, the list of stocks making 52-week lows has grown over the past couple of weeks, although it still remains tiny relative to the overall market. Looking for ideas on this list can be a risky exercise, akin to catching falling knives; many on the list will stay on the list. On the other hand, it's also common for temporarily out-of-favor stocks to find themselves exiled to lowly group, only to emerge from it with the kind of strong advance that value-seeking investors cherish. 

Dell (DELL) is a name that I have struggled with for the past few months. I first suggested Dell a worthy value candidate when shares were changing hands for around $10. Today Dell finds itself joining the 52-week low list at $8.80. Dell is reinventing itself and doing so in the most competitive and rapidly moving industry. Perhaps Dell will find its way to $7 a share before $15, or perhaps not. Yet until I see signs that the balance sheet is crumbling and the company's free cash flow is negative, perhaps Dell is now a free call option on a turnaround -- an option yielding 3.6% and nearly $3 in cash per share to be precise. 

I don't harbor the same view for Hewlett-Packard (HPQ), another tech titan that has become a member of the 52-week-low club. With no tangible equity to speak of and net debt of about $20 billion against a market cap of $25 billion, Hewlett-Packard has a tough road ahead. Considering today's economic backdrop, this stock gets filed in my "too tough to figure out" box.

The retail shopping bonanza begins this Friday; the next three to four weeks are when retailers reportedly move out of the loss column and into the profit column. Several retailers have found themselves at or near 52-week lows, including Bed Bath & Beyond (BBBY), Big Lots (BIG) and J.C. Penney (JCP). Forget the analyst reports or estimates; if you are at the malls this week, take a peek inside these stores and do your investigative work. One favorite that is close to a 52-week low is Stein Mart (SMRT), a high-quality discount retailer that has a long string of profitable quarters and a pristine balance sheet. 

This could be a perfect time for investors to think squarely about valuation while paying attention to the economy and its trends, not the other way around. The economy was in shambles in 2009. But consider where valuations were then and what that meant for investors. Today's valuations are not close to those of 2009, but when valuations are attractive, the economy doesn't have to be perfect for them to do well. 

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Gad had no positions in stocks mentioned.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider SMRT to be a small-cap stock.  You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

TAGS: Investing | U.S. Equity | Stocks

More from Investing

Bearish Bets: 3 Stocks You Should Consider Shorting This Week

Bob Lang
Jul 3, 2022 10:30 AM EDT

These recently downgraded names are displaying both quantitative and technical deterioration.

Let's Shine a Light on Lucid Motors as It Slides Downhill

Brad Ginesin
Jul 2, 2022 1:00 PM EDT

LCID's market cap has been deflated, so is it now a bargain, or can it slip further?

Stop Wishing, Hoping and Praying and Take Control of Your Investing

James "Rev Shark" DePorre
Jul 2, 2022 10:00 AM EDT

The most powerful thing an investor can do is embrace the idea that they don't know what the future holds.

If You've Got Time, These Three Dividend Aristocrats Should Pay Off

Bob Ciura
Jul 2, 2022 7:30 AM EDT

There high-growth dividend stocks will be here over the long haul.

Welcome to Second Semester on Wall Street, Here's How to Make the Grade

Jim Collins
Jul 1, 2022 4:36 PM EDT

Think you can own big tech? You might just get an 'F' for that. Here's what will get you on the other side of this year.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 09:49 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Stop Wishing, Hoping, and Praying and Take Control...
  • 07:59 PM EDT PAUL PRICE

    Very Good Quarterly Numbers From Bassett Furniture (BSET)

    Bassett Furniture blew right through analysts es...
  • 04:41 PM EDT PAUL PRICE

    First-Half Results - Putrid; Second Half Results - Likely to Be Much Better

    It's great that we're done with June. 2022 mark...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login