Hi there, Fools. I’m back again to highlight three stocks hitting new 52-week lows. As a quick refresher, I do this because the greatest wealth is built by buying solid stocks
- during times of extreme pessimism;
- while they’re being ignored and forgotten; or
- when they’re trading at significant discount to “intrinsic value.”
In other words, the best time to buy high-quality stocks is, quite simply, when no one else wants them.
So, without further ado, let’s get to this week’s list of bargain plays.
Kicking things off is Encana (TSX:ECA)(NYSE:ECA), which hit a new 52-week low of $8.43 late last week. Shares of the natural gas company are down 30% year to date versus a loss of 15% for the S&P/TSX Capped Energy Index.
Earlier this month, Encana plunged 15% in a single day — its steepest ever intraday drop — as investors rebelled against the $5.5 billion all-stock purchase for Newfield Exploration. But while it might take a while for Mr. Market to get over the dilution concerns, management remains confident that Newfield will boost Encana’s key cash flow figures over time.
With the stock currently trading at a forward P/E of 10, now might be a good time to bet on management’s long-term conviction.
Next up, we have Dorel Industries (TSX:DII.B), whose shares hit a 52-week low of $19.41 on Friday. Year to date, the manufacturer of children’s products, bicycles, and furniture are down 36% versus a loss of 10% for the S&P/TSX Capped Consumer Discretionary Index.
Trade trouble between the U.S. and China continues to weigh heavily on Dorel. In Q3, net income plunged 28% on a revenue increase of just 4.3%. Moreover, management warned that tariffs on Chinese imports could jump from 10% to 25% in 2019 if a new trade agreement isn’t reached.
Of course, the stock now boasts an especially juicy dividend yield of 7.8%. Throw in a comforting beta of 0.4 — 60% less volatility than the market — and Dorel’s risk/reward trade-off seems attractive.
Rounding out our list is Canfor (TSX:CFP), which hit a 52-week low of $18.27 late last month. Shares of the lumber company are off 32% over just the past three months, while the S&P/TSX Capped Materials Index is down 11% in the same period.
Troubling market conditions are forcing management’s hand. Earlier this month, Canfor said it will temporarily cut lumber production in B.C. by about 10% in the current quarter. The company cited slumping lumber prices, increased log costs, and wildfire-related supply issues for the move.
On the bargain investing/bright side, Canfor now trades at cheapish forward P/E of 11. As long as you can stomach plenty of volatility — beta of 2.1 — the stock remains an intriguing long-term turnaround opportunity.
The bottom line
There you have it, Fools: three beaten-down bargain opportunities for you to consider.
To be sure, they aren’t formal recommendations. Instead, view them as a starting point for further research. Stocks in decline can keep falling for a prolonged period of time, so extra due diligence is required.