If you’re like many investors, you may feel this isn’t your normal bull market. For every data point supporting a strengthening economy, you can find one or more that suggest things are weaker than expected.
In the end, it may all be open to interpretation. That's why it’s good to adopt investment strategies that don’t require guesswork about the broader economy. One of those is finding stocks that are trading below their fair value. One tactic is to look at stocks trading at or near their 52-week low.
To be fair, many stocks are correct for a good reason. However, investor psychology is prone to FOMO in both directions. When a stock is sold below its fair value, it can be a good opportunity for nimble investors.
The MarketBeat stock screener lets you select stocks within a certain percentage of a 52-week low. The screener produced three stocks that may offer a buy case for investors.
Albemarle Is a Solid Pick as a New Commodity Cycle Begins
Albemarle Corp. (NYSE: ALB) is one of the world’s leading lithium miners. Lithium is needed in areas such as electric vehicles (EVs), smartphones, and the high-speed semiconductor chips needed for artificial intelligence (AI) applications.
That’s why the price of lithium reached an all-time high early in 2024. In fact, less than two years ago, in November 2022, ALB stock reached an all-time high above $320 per share as investors tried to front-run that expected demand.
However, as is often the case, supply got ahead of demand, and lithium mining stocks have been among the biggest underperformers in 2024. ALB stock is down 38% in 2024. The stock is off its 52-week low, but it’s still down over 50% in the last 12 months.
That’s how cyclical stocks work, and analysts believe the commodity cycle is getting ready to turn. Analysts give the stock a consensus price target that’s more than 29% higher than its price on September 17, 2024. When you combine that growth potential with a dividend that has increased for 30 consecutive years, you can see why Albemarle is a key name to consider among basic materials stocks.
The Short-Term Opportunity in This MLP Is More Than a High-Yield Dividend
NextEra Energy Partners (NYSE: NEP) is a master limited partnership (MLP) that has been battered by high interest rates. The company is a subsidiary of NextEra Energy, and its complicated business model involves taking on debt to pay for the assets it receives from its parent company.
That model has put the company’s earnings under pressure as interest rates have climbed from near zero percent to their current 5.25 percent. That’s reflected in the stock price, which is down approximately 70% in the last two years.
What has continued to attract investors is the company’s dividend which has a current yield of 14.21%. Despite the pressure on earnings, the company has prioritized dividend growth which it has achieved in each of the last 10 years.
But with the market at the beginning of a rate cut cycle, the outlook for earnings is improving. And since earnings growth is the best predictor of stock price growth, NEP stock looks attractive for more reasons than its dividend heading into 2025.
Patience Could Pay Off With Moderna
Moderna Inc. (NASDAQ: MRNA) is a biotechnology company that became a household name to investors in 2020. The company’s COVID-19 vaccine led to unprecedented growth in revenue and earnings. That demand, however, is far in the rear-view mirror, and MRNA stock is down more than 80% from its 2021 high.
However, Moderna's reason for owning Moderna lies in the company’s pipeline. In addition to a recently approved RSV vaccine, the company has several cancer vaccines in Phase 3 trials. The company has taken steps to ensure it is putting its financial resources behind the drug candidates with the best chance of succeeding.
Of course, there’s no guarantee that all of these candidates will get to market. But if even a handful of these vaccines are approved, it could deliver strong revenue and earnings growth.
Investors interested in MRNA stock should watch the company’s earnings closely for progress in its clinical trials. With no dividend, this isn’t a stock you need to pile into all at once. But near its 52-week low, it could be worth some speculative dollars.
