Buying The Dip: Three 'Good' Stocks Are Near 52-Week Lows — Are They Worth It?

Zinger Key Points
  • Despite trading near 52-week lows, three companies are rated as "Good" by Benzinga's rating overviews.
  • Schlumberger, AGCO and Darling Ingredients could be cheap, attractive investments.
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Schlumberger NV SLB, Agco Corp AGCO and Darling Ingredients Inc DAR are three American companies trading near 52-week lows. Benzinga’s fundamental and technical ratings signal that the stocks are trading below their intrinsic value, check technical boxes and could outperform Wall Street expectations.

Benzinga Ratings: Benzinga generates rating overviews for publicly traded companies utilizing fundamentals and technicals. Fundamental analysis includes earnings per share (EPS), price-to-earnings (PE), price-to-book ratios, return on equity, and debt-equity ratios compared to public comps. Technical analysis uses buy and sell ratings, RSI and price trends.

Schlumberger Bull Case: Schlumberger, an off-shore drilling services company, is rated “Good,” performing well in fundamental and technical analysis.

The company specializes in using technology for processing data for reservoir exploration, carbon capture and drilling among other segments.

The company’s stock has traded lower after encouraging signs of conflict resolution in the Middle East and an OPEC meeting in which members said they would start phasing out voluntary production cuts, according to Benzinga Pro.

There are encouraging signs that Schlumberger can reverse course. In March, the company acquired Aker Carbon Capture ASA AKCCF to improve the company’s carbon capture platform.

In April, the company announced the acquisition of the publicly traded ChampionX Corp CHX in an all-stock deal. The deal will help Schlumberger’s production chemicals segment. SLB’s share price did not move off of either acquisition.

Schlumberger shares are trading at $43.69, up 1.13% on Thursday. The stock is down about 30.48% from its 52-week high, which is $62.12. The company recently increased its yearly dividend to $1.10.

Agco Corp Bull Case: Agco, an agricultural machinery manufacturer, is rated “Good.”

Agco is a relatively small manufacturer of farming equipment. The company competes with the much larger Deere & Co in high-end tractor equipment. While the company excelled throughout the 2010s and early 2020s, it has struggled recently along with the broader industry: iShares MSCI Agriculture Producers ETF VEGI is down over 6% in the past year amid slowing demand.

Agco is trading at a low PE of 7. While the stock’s price has been beaten up, the company still commands a substantial market share in an industry with a stable compound annual growth rate.

The Georgia-based company recently closed a deal to acquire Trimble to improve Agco’s agritech platform. The acquisition could be a future growth driver.

Agco shares are trading at $103.19, down 0.29% on Thursday. The company’s stock is down 24.89% from its 52-week high of $140.46.

Darling Ingredients Bull Case: Darling Ingredients, a natural ingredients producer, is rated “Good.”

The company transforms food and agriculture waste into sustainable ingredients for use in animal feed and energy, among other products.

Darling saw rapid growth in the aftermath of the pandemic, jumping over 400% in a year. The company’s revenue and earnings growth and earnings have since declined.

In particular, the company’s Diamond Green Diesel joint venture with Valero Energy Corporation VLO has seen declining earnings.

Amid the company’s woes, its drawdown could mark an attractive time for investors optimistic about Darling’s business model to invest in the company. In particular, Darling’s sustainability goals have substantial potential amid greater environmental consciousness.

Darling Ingredients shares are trading at $37.80, down 0.18% on Thursday. DAR is down 46.88% from its 52-week high of $71.60

Also Read: Jim Cramer Recommends Buying PNC Financial Services, Calls MasTec A ‘Great Infrastructure Play’

Photo: Shutterstock

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Posted In: Long IdeasTrading IdeasagricultureAgritechExpert IdeasFundamental Analysisoffshore drillingStories That Mattersustainabilitytechincals
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