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Fight Volatility with These 5 Value Stocks Near 52-Week Lows

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The double trouble resulting from the uncertainty related to the pending outcome of the Fed’s ongoing meet and chances of Brexit (expected to be decided on Jun 23), have caused immense suspense among investors. This, along with other macroeconomic worries, has led to considerable volatility in the market.  

In such a scenario, where even the most insightful investor can lose vision, going for cheap stocks having great potential may prove to be a windfall for bargain hunters. To be loud and clear, stocks trading near 52-week lows can make good bets.

Pick the Fallen Angels

52-week lows do not imply that the stocks have bottomed out and neither does it mean that they should be abandoned. Stocks often reach these lows owing to the market’s reaction to any specific news associated with the company or the sector. In any case, this does not necessarily portray any kind of inherent weakness in the stocks that reach this mark.

However, a check on the fundamental strength and financial position of such stocks is suggested before making them part of your portfolio. Hence, investors must perform a background check on the operational health and profitability of the companies to ensure their growth prospects.

Seeking Value

This is where our strategy of selecting value stocks comes into play. Value stocks offer an opportunity to buy a stock that is currently undervalued by the market. We think investing in these stocks could actually be a safer bet, given their inclination for steady growth and momentum in price.

Value investing offers a break for entering the market and capturing stocks that have otherwise been overlooked by a majority of investors, and are hence, trading economical. Moreover, these stocks have low P/Es, pay decent dividends, hold solid outlooks, usually yield high returns and produce exponential gains over time.

Additionally, we should focus on stocks with a favorable Zacks Rank for best results.

5 Solid Bets

Assimilating these factors, we used our Zacks Style Score system to zero in on the following five picks that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Value Style Score of ‘A’. Also, these are currently trading at or below 10% of their 52 Week High-Low range, making them a cheap bet.

Based in Plano, TX, Rent-A-Center, Inc. (RCII - Free Report) is the largest rent-to-own operator in the U.S., offering durable goods such as consumer electronics, appliances, computers, furniture and accessories. The company currently sports a Zacks Rank #1 and closed at $12.00 yesterday, near its 52-week low price of $9.76.

Further, Rent-A-Center’s earnings history reveals that it has outperformed the Zacks Consensus Estimate for five straight quarters, with an average beat of 7.3%. Also, its earnings estimate for 2016 has advanced 4.6% to $2.05 over the past 60 days.

Tower International Inc. TOWR that closed at $19.84 yesterday, near its 52-week low of $19.36, is also a solid bet. The company, headquartered in Michigan, is engaged in the manufacture of engineered structural metal components and assemblies, mainly serving original equipment manufacturers.

This Zacks Rank #2 company’s bottom line has surpassed the Zacks Consensus Estimate for nearly four and a half years now, with an average beat of 8.4% over the past four quarters, thus highlighting its underlying strength. Also, the stock showcases a 3.6% upward revision in its estimate for 2016, over the past 60 days.

New York-based AMC Networks Inc. AMCX is associated with owning and operating several cable television brands that provide content to audience, alongside serving distributors and advertisers worldwide. The Zacks Rank #2 stock is currently trading at $60.06, compared to its 52-week low price of $59.45.

The company’s bottom line has outperformed the Zacks Consensus Estimate by 11.9% over the trailing four quarters. Flaunting a long-term growth rate of 10.1%, AMC Networks has also witnessed upward revisions in its earnings estimate for 2016 from $5.78 to $5.93, over the past 60 days.

One can take a look at MSG Networks Inc. MSGN, which is a subsidiary of Cablevision Systems Corporation and engages in media content. Founded in New York, MSG Networks’ earnings beat our estimate by an average of 13.6% over the trailing four quarters.

Also, this Zacks Rank #2 company’s earnings estimates for fiscal 2016 have jumped 6.1% to $2.08 over the past 60 days. The company is currently trading at $16.35, with its 52-week low price at $15.30.

Last but not least, one can count on KVH Industries Inc. KVHI, with a Zacks Rank #2. The stock closed at $8.04 yesterday, while its 52-week low price stands at $7.51.

Additionally, KVH Industries has seen a 13.6% uptrend in the Zacks Consensus Estimate for 2016, over the last 60 days. Moreover, its earnings have outpaced the consensus estimate by a robust 78.6% over the trailing four quarters. Headquartered in Middletown, RI, the company is a leading provider of in-motion satellite TV and communication systems.

Bottom Line

In the financial world, where everyone wants to win, investing in the aforementioned hidden gems is likely to be fruitful. Though these companies are cheaply priced at the moment, they have strong fundamentals which promise long-term growth.

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