3 Beaten Down Stocks To Buy
Marshall Hargrave: Bottom feeding in stocks is always risky business, but if done right, can lead to market-beating performance.
Sometimes stocks are trading at 52-week lows for a reason. Other times, you’re getting a great buying opportunity. However, determining which-is-which is always the hard part.
It pays to know why a stock has been beaten down.
Hershey was beaten down last month due to a price hike in its packaged products. But major comps, Kraft Foods and Nestle, are sure to follow suit. Owning the largest fleet of offshore drilling rigs.
Transocean was hit especially hard as the entire market sold off the industry earlier this year.
Well, I’m back in the bargain bin, searching for compelling investments that are trading at 52-week lows. The three stocks below have made new 52-week lows over the last week or so, but they look to be very compelling long-term investments.
Here are the top 3 beaten down stocks making new 52-week lows:
No. 1 Beaten Down Stock: Oceaneering International (NYSE: OII)
Like Transocean, Oceaneering operates in the beaten down offshore drilling space. The company provides engineering services for offshore oil and gas companies. It has been sold off with the drilling industry, ultimately creating the current buying opportunity.
Oceaneering’s key segments include remotely operated underwater vehicles (ROVs) and subsea products. ROVs are keys to deepwater drilling construction, and maintenance and repair services. The company is the market share leader when it comes to ROVs, owning over 75% of the market. It’s also a market share leader in subsea products, which includes umbilicals for providing power to undersea equipment.
Compared to its major oil and gas equipment peers, it’s easily one of the best investments in the market. It trades at a forward P/E (price-to-earnings ratio based on next year’s earnings) of 14.7. Factor in Wall Street’s earnings expectations for the next five years and Oceaneering trades at a P/E-to-growth (PEG) ratio of just 0.85. That’s well below the likes of industry peers Schlumberger and Halliburton, which trade at a PEG of 1.2 and 1.0, respectively.