StreetAuthority | Apr 27, 2012 06:14AM ET
Volatility is back. The markets slumped badly at the end of last week and have rallied considerably higher thus far this week. From solid corporate earnings to tepid economic reports to deepening troubles in Europe, there's a whole lot of push and pull going on right now.
Consider this fact: The S&P 500 has fallen at least 1% on four occasions this month alone. It happened only once in March and not even once in February. That's actually good news for value investors: each sell-off has brought a fresh list of bargains, as the list of 52-week lows starts to grow larger.
This week, I've come across a handful of solid long-term businesses that have touched fresh 52-week lows in the past few trading sessions. I've been tracking these companies over the years, awaiting the moments when they temporarily fall out of favor. They're in the doghouse once again, and now look inexpensive in the context of their long-term track record.
1. Barrick Gold (NYSE: ABX)
This leading gold miner has bounced around between $45 and $55 for much of the past two years, but has recently fallen below support levels. My colleague Tim Begany wisely suggested investors dump this stock back in November, although the sell-off now looks complete. This stock is now looking a heck of a lot more appealing.
Yet with gold trading at around $1,640, Barrick is still generating solid profits: The company is likely to earn about $5 a share this year and $6 a share in 2013, assuming stable gold prices. Costs will remain a problem, but Barrick remains on track to boost output as its key mines hit their stride, which explains the rising earnings per share (EPS). A fairly high level of depreciation means cash flow per share will be roughly 20% to 30% higher in each of those years.
Merrill Lynch rates shares a "Buy," with a $64 price target -- more than 60% above current levels using gold at $1,400 over the next five years in its core assumptions. So gold could pull back $200 from current levels without impacting that target.
2. Polycom (Nasdaq: PLCM)
This provider of audio and video-conferencing systems has felt the pain of rising competition and a slowing global economy, pushing its stock down from $33 last summer to a recent $12. Ouch.
by David Sterman
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