All told, at just 10 times forward earnings, Stone could be quite the bargain.
“For sale” sign in the front yard
Let me be clear: Just because I’m not a fan of activist investor Carl Icahn doesn’t mean I don’t take close notice of his actions. He has successfully spearheaded buyouts and asset sales at what he deems undervalued companies on multiple occasions that turned out positive for shareholders. In November, Icahn disclosed a 13% stake in Enzon Pharmaceuticals, Inc. (NASDAQ:ENZN), leading many to believe a sale or partial sale could be on the horizon. Following the company’s $2 special dividend, I agree that now could be the time to pounce on Enzon.
Enzon, which recently retained Lazard Ltd (NYSE:LAZ) to help explore strategic alternatives, makes the majority of its royalty revenue from Merck & Co., Inc. (NYSE:MRK)‘s Peg-Intron, for the treatment of hepatitis C. True, a new class of hepatitis C drugs could cut into some of Merck’s revenue, and thus Enzon’s royalty revenue, but Peg-Intron’s patent isn’t slated to expire for two more years. With much of Enzon’s drug development process largely on hold, Enzon should bring in around $0.50 in EPS annually until 2015.
Enzon’s pipeline, while still in early and mid stages, has shown promise. EZN-2208, as my Foolish colleague David Williamson has noted, is its most promising pipeline candidate for metastatic breast cancer and colorectal cancer. Given the desperation of big biotechs looking for growth opportunities due to the unforgiving patent cliff, I could see a 20% to 30% premium being paid for Enzon as a whole.
This week is all about going out on a limb. Warren Buffett has always said to “be greedy when others are fearful,” and the fear in the above three stocks appears to be peaking, making for an excellent buying opportunity, in my opinion.
The article 3 Stocks Near 52-Week Lows Worth Buying originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Lazard.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.