While many companies are rising past their fair values, others are trading at potential bargain prices. Although many investors would rather have nothing to do with stocks wallowing at 52-week lows, it makes sense to see whether the market has overreacted to a company's bad news.
Here's a look at three fallen angels trading near their 52-week lows that could be worth buying.
Hardly fizzling out
I'm going to kick off this week of value stock hunting in true Warren Buffett fashion by suggesting that value investors look no further than beverage giant Coca-Cola if they want a great deal over the long run.
Source: Enable Midstream Partners.
Source: BioMed Realty Trust.
Three factors in particular make BioMed Realty Trust a strong name for value stock investors to consider (if the prior points didn't move you). First, it maintains significant pricing power that allows its rental agreements to escalate rent alongside inflation. This means deals put in place today won't necessarily be disadvantageous for the company in 2020, for instance. Secondly, BioMed's contracts are often locked in for the long-term, leading to steady and predictable cash flow for the Trust. Finally, as inflation increases the value of its properties over time, it has the opportunity to jettison older buildings for a significant profit. In the fourth-quarter it sold a manufacturing facility in Maryland for $322.5 million, netting a $136.6 million gain in the process over an 8.5-year holding period. That's a phenomenal return of nearly 15% per year.
I believe that as interest rates rise it'll only reinforce the need for life science companies to hold off on purchasing their own facilities and instead turn to leasing, which is cheaper in the short- and intermediate-term.
A 4.7% dividend yield and a forward P/E of 14 could be just what the doctor ordered!
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The article 3 Value Stocks Near 52-Week Lows Worth Buying originally appeared on Fool.com.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, track every pick he makes under the screen nameTrackUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.The Motley Fool recommends Coca-Cola. The Motley Fool has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
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