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3 Value Stocks Near 52-Week Lows Worth Buying

Image source: Southwestern Energy courtesy of data from Baker Hughes and Bloomberg.

Despite the recent weakness in natural gas prices, investors who believe in the long-term energy growth picture might want to take a closer look at Southwestern Energy. For starters, natural-gas-fired power is projected to increase by a whopping 40% between 2013 and 2040, based on a report by the Energy Information Administration. Additional constraints on the coal industry vis-à-vis federal government emission standards could pump up the use of this clean-burning fuel even more.

Investors also need to understand that the market dynamics of the oil and gas industry take time to evolve. Oversupply isn't something that the industry shakes out overnight. Rig reduction, time, and an increase in demand are the natural solution to an oversupply issue. At some point in the future we'll see natural gas prices on the mend. And based on Southwestern Energy's recently announced three-year term loan agreement, it shouldn't have any trouble making it to that future date.

On the surface Southwestern Energy may not look like a value stock, given its forward P/E of 51. However, its price-to-book of just 0.9 and Wall Street expectations calling for up to $2 in EPS by 2018 could make this a compelling energy-sector value stock.

X-tended gains?

Admittedly, the biotech sector isn't where I usually look for traditional value stocks. The reason is that nearly 90% of publicly traded biotech companies are currently losing money. However, one profitable biotech value stock you may want to keep in your sights is San Francisco-based Medivation .

Image source: Astellas Pharma.

Since summer, the air has really come out of biotech valuations. This is partially a result of Congress expressing concern about a handful of drug developers and the way they price their products, but it could also be a healthy pullback following biotechs' mammoth outperformance over the past five years. For Medivation, it's probably a bit of both, as its stock is up nearly 1,400% in five years, and its lead product, Xtandi -- a treatment for pre-chemo and post-chemo metastatic castration-resistant prostate cancer patients, developed in collaboration with Astellas Pharma -- costs around $90,000 per year. That's more than enough to pique the interest of irritated consumers who feel like they're being gouged by drugmakers.

But there are plenty of reasons to be positive about Medivation's future -- and they all have to do with Xtandi. In clinical trials Xtandi simply outperformed a number of its peers. In the pre-chemo setting it lengthened the time treatment-naïve patients were able to hold off on starting chemo by a whopping 17 months, and on an overall basis it boosted median overall survival by four months to 35.3 months compared to 31.3 months for patients in the placebo group. In total, Xtandi reduced the risk of patient death by 23% in the second-most commonly diagnosed cancer. Long story short, Xtandi is likely to be a growth driver for Medivation and Astellas for many years to come.

Like Southwestern Energy's, Medivation's forward P/E of 22 may not scream "value stock," but a glance at what the future may hold could have you thinking otherwise. Between 2014 and 2018, Medivation's revenue is expected to double, and its EPS could more than double to $3.70. Furthermore, its PEG ratio of 0.43 implies that Medivation is still inexpensive. Consider this a must-watch value stock in the biotech sector.

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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 The Buckle. 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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