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Just as we examine companies each week that may be rising past their fair value, we can also find companies potentially trading at bargain prices. While many investors would rather have nothing to do with companies tipping the scales at 52-week lows, I think it makes a lot of sense to determine whether the market has overreacted to the downside, just as we often do when the market reacts to the upside.
Here's a look at three fallen angels trading near their 52-week lows that could be worth buying.
A shining example of a good value Many investors have written off silver and gold miners for dead in the interim as China grapples with slowing GDP growth and metal-hungry sectors like electronics have seen capital expenditure pullbacks across the board. That doesn't, however, mean that you have to ignore amazing values in the silver space like Great Panther Silver because they'll likely bottom long before the market does.
Great Panther recently lowered its full-year silver production to a range of 2.2 million to 2.4 million silver-equivalent ounces for fiscal 2012, which is below its prior guidance of 2.5 million to 2.75 million silver-equivalent ounces. Many have taken this as a sign that production problems in Mexico are hampering its results, but I would suggest that recent ore recovery rates would signal just the opposite.
Thanks to recent mine upgrades at Guanajuato, operating efficiencies have improved, resulting in a combined mine recovery rate of 90.9% for silver and 91.9% for gold. Also, gold production doubled in Great Panther's most recent quarter, leading to what I anticipate will be even better cash flow stability.Finally, the Federal Reserve's loose policy of buying mortgage-backed securities until unemployment dips below 6.5% likely means that a steady increase in the money supply should be a long-term positive for dollar-hedging stocks like gold and silver miners.