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TransCanada Corporation (USA) (TRP), M.D.C. Holdings, Inc. (MDC): Stocks Near 52-Week Lows Worth Buying

Just as we examine companies each week that may be rising past their fair value, we can also find companies potentially trading at bargain prices. While many investors would rather have nothing to do with companies tipping the scales at 52-week lows, I think it makes a lot of sense to determine whether the market has overreacted to the downside, just as we often do when the market reacts to the upside.

Here’s a look at three fallen angels trading near their 52-week lows that could be worth buying.

Harnessing energy to your advantage

TransCanada CorporationFollowing years of debate over whether or not the U.S. should approve the Keystone XL pipeline, and allow for the importation of Canadian oil to the Gulf of Mexico as opposed to dealing with foreign oil, I’m finally ready to give my resounding endorsement to TransCanada Corporation (NYSE:TRP).

Before there was even talk of a pipeline that would create jobs and allow for the easier flow of energy assets from Canada into the U.S., I was a fan of TransCanada Corporation (NYSE:TRP). I believe the big boom in the energy sector in the upcoming decade isn’t going to come from drilling and exploration, or even refining. Instead, I see midstream companies that transport and store energy assets as the biggest winners. In its latest quarterly results, TransCanada Corporation (NYSE:TRP) announced some $26 billion in projects that are scheduled to commence over the upcoming years. These investments are the key to its success, with the U.S. attempting to reduce its reliance on foreign imports and encouraging onshore drillers to boost production. TransCanada is expected to become an even bigger player in transmission during and after the Obama administration in the United States.

At roughly 18 times forward earnings, TransCanada Corporation (NYSE:TRP) isn’t exactly cheap; then again, not a single midstream company is at the moment. However, TransCanada shareholders are expected to receive a projected yield of nearly 4%, which seems like a bargain given the growing demand for pipeline infrastructure.

Home is where the profits are

Don’t fall over, but I’m about to recommend a homebuilding stock. If you recall, I’ve been pretty steadfast against the sector, with artificially low lending rates caused by favorable monetary policy from the Federal Reserve buoying prices and mortgage applications. The thought process here is that once QE3 is pared back, interest rates will rise dramatically and mortgage applications, as well as interest in home ownership, will dry up.

However, for homebuilders with considerably better cash positions than their peers, and that made strategic land purchases during the depths of the recession, like M.D.C. Holdings, Inc. (NYSE:MDC), I would continue to expect big rewards.

Take Lennar as a perfect example of a homebuilder that’s been greatly rewarded for its solid results lately. In spite of having the best homebuilding margins in the sector, Lennar also boasts approximately $4.3 billion in net debt, which can be a liability if interest rates begin to rise — not necessarily because of the interest rate Lennar pays so much as its ability to make additional purchases in the future. M.D.C. Holdings, Inc. (NYSE:MDC), on the other hand, also boasts a net debt position, but in this case, roughly $300 million. With its fiscally conservative management team, M.D.C. Holdings, Inc. (NYSE:MDC) has been able to pay a sizable dividend that’s currently yielding 3.1%, but it also has the flexibility to build and make purchases without having to dig too deeply into its available credit.

If growth does come to a grinding halt throughout much of the sector when rates rise, M.D.C. Holdings, Inc. (NYSE:MDC) seems uniquely positioned to rise toward the head of the pack while more heavily indebted homebuilders struggle.

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