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7 of the Best Stocks to Buy at 52-Week Lows

Wayne Duggan

These stocks are at a low price point.

A stock market pullback since early October eliminated much of the gains in U.S. stocks in 2018 and left dozens of stocks trading at or near their lowest levels of the year. Some of these stocks are trading at new lows for good reason, but others are providing long-term investors an excellent opportunity to buy strong stocks at a steep discount. Bank of America recently compiled a list of buy-rated stocks trading within 1 percent of their 52-week lows. Here are seven of the best stocks to buy at their best prices of the past year.

Allstate Corp. (ticker: ALL)

Allstate recently dipped to fresh 52-week lows after the insurance giant reported $136 million in pretax losses related to Hurricane Michael. Analyst Alison Jacobowitz says the Michael damages are manageable, and the company has reduced its exposure to the hurricane-prone Florida residential insurance market to less than 2 percent of total policies. Losses from the California wildfires have also weighed on ALL stock, but Jacobowitz says it's still too early to estimate the fires' impact. In the long term, Jacobowitz says Allstate should generate above-average returns. Bank of America has a $110 price target for ALL stock.

Devon Energy Corp. (DVN)

Devon Energy is an oil and gas exploration company with 2 billion barrels of oil equivalent of reserves and roughly 600 million BOE of daily production. WTI crude oil prices have fallen from recent highs in the mid-$70s/bbl to about $50/bbl on concerns that Iranian sanctions will not significantly impact global supply. Analyst Doug Leggate says Devon should improve its capital efficiency in 2019 and will increase its allocation to its best-performing Permian acreage. Bank of America has a $65 price target for DVN stock, implying roughly 100 percent upside from recent levels.

Aptiv (APTV)

Aptiv is an auto parts company that provides vehicle electrical systems and advanced software and sensing systems for the auto industry. APTV stock is down 14 percent in the past year, recently hitting new 52-week lows on concerns about a cyclical downturn in the U.S. auto market. Analyst John Murphy says signal and power solutions revenue, operating margin and adjusted operating income were all higher than he expected in the most recent quarter, and the market has been overly pessimistic about Aptiv's outlook. Bank of America has a $102 price target for APTV stock.

PDC Energy (PDCE)

PDC Energy is an oil and gas exploration and production company with 453 million BOE of proved reserves in the Rockies, Permian and Utica Shale regions. PDC dodged a bullet when Proposition 112 was voted down in Colorado in the recent midterm election; the provision would have dramatically reduced the buffer distance between drilling operations and local residences and businesses. Analyst Asit Sen says PDC's low leverage and its relatively robust hedging positions the stock to outperform its peer group. Bank of America has a $69 price target for PDCE stock.

Newfield Exploration Co. (NFX)

Newfield Exploration is an oil and gas producer with the vast majority of its 513 million BOE in proved reserves within the U.S. NFX stock has plummeted 41.1 percent in the past year, but Leggate says Newfield's valuation is depressed relative to its peers and relative to its historical levels. In the most recent quarter, natural gas liquids and natural gas production were above expectations, with oil production in-line with consensus estimates. Bank of America has a $45 price target for NFX stock, more than double its recent share price.

TE Connectivity Ltd. (TE)

TE Connectivity is the world's largest producer of passive electronic components, with the auto industry (30 percent of sales) and the telecom industry (19 percent of sales) accounting for roughly half the company's business. TEL stock is down 19.9 percent in the past year, but analyst Wamsi Mohan says TE Connectivity will be one of the long-term winners in a struggling auto industry. In addition, Mohan says investors should benefit from the company's robust cash flow, share buybacks and 2.3 percent dividend yield. Bank of America has a $117 price target for TEL stock.

Valero Energy Corp. (VLO)

Valero Energy is the largest independent oil refinery in the U.S., with 13 domestic refineries and daily throughput capacity of roughly 2.5 million barrels. VLO stock is down 13.3 percent in 2018 to new 52-week lows, but Leggate says Valero's cash yield of 7 percent makes it a more attractive play than its smaller peers. Leggate says Valero's diversified asset portfolio, its heavy oil exposure and its commitment to return excess cash flow to shareholders makes it a relatively attractive and defensive long-term investment. Bank of America has a $126 price target for VLO stock.



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