This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Stocks to Buy at 52-Week Lows

BOSTON (TheStreet) -- Harry Rady, chief investment officer of Rady Asset Management, bet on shares of Goldman Sachs (GS), Google (GS) and Monsanto (MON) before they rebounded.

Now he's hoping for the same reaction from Research in Motion (RIMM), Toyota (TM) and Western Union (WU).

San Diego, Calif.-based Rady Asset Management, which manages $270 million, takes a contrarian approach to investing, offering hedge-fund-like strategies in mutual funds. One strategy he employs is buying stocks trading at or near 52-week lows. That method can be attractive to investors during sluggish stock markets, he says, because of downside protection -- the shares have already tanked -- and the potential for big returns.

"On the long side, we buy irreplaceable, dominant first-tier companies," Rady says. His investment firm's short-only fund takes wagers on a decline in shares of what he calls second-tier companies trading at 52-week highs. Rady says cumulative returns in the long-only strategy have been triple those of the benchmark S&P 500 Index over the past 15 years.

Rady says a pitfall is a so-called value trap, when a company whose shares have tumbled is mistaken for a value stock.

"When stocks get cut in half, you sometimes buy 50 cents for 50 cents," he says. "My job is to make sure we're buying $1 for 50 cents."

Another risk is being too early with stock picks. Rady says the fund's biggest sector holding is natural-gas exploration and production companies. Natural gas is trading at historic lows, and many investors expect no quick turnaround.

"Our performance has suffered, but that's one of the drawbacks of being a deep value investor," Rady says.

For investors looking for deep-value plays in a volatile market, Rady offers a list of five stocks owned in funds by Rady Asset Management.

1 of 6

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,042.65 +98.84 0.58%
S&P 500 1,967.57 +2.89 0.15%
NASDAQ 4,415.49 +19.2860 0.44%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs