4 Bargain Stocks You Can Buy Today

Image source: Flickr user Elliott Brown.

The market is always offering up stocks in its bargain bin, but that doesn't necessarily mean every stock that's on sale is worth buying. We asked some of our top Motley Fool contributors to weigh in with their top bargain-bin buys, and they came back with four companies that make everything from travel reservations to pain medicine. Read on to find out whether or not these special deals may make sense to own in your portfolio.

Andres Cardenal: IBM is going through a transition, moving away from low-margin businesses and toward areas with more room for growth and profitability, and this is hurting revenue. In addition, IBM makes nearly two-thirds of sales in international markets, and foreign currency depreciation is a big headwind for the business.

Total revenue during the first quarter of 2016 declined 5%. This was not an isolated event; IBM has delivered stagnant or even declining sales since 2013, so disappointing sales performance is a valid reason for concern among investors in Big Blue.

On the other hand, the company is betting on a group of business it has identified as strategic imperatives (cloud, analytics, security, social, and mobile technologies), and performance is really promising in these areas. Constant currency revenue from strategic imperatives grew 17% last quarter, and it accounted for 37% of the company's sales over the last 12 months.

IBM stock is currently trading at a price to earnings ratio of around 11 times earnings, which represents a major discount versus an average price to earnings ratio in the neighborhood of 19 for companies in the S&P 500. Offering a similar perspective, the average price to earnings ratio for companies in the industry is 17, according to data from Morningstar.

If IBM can jump-start growth via an accelerating expansion into strategic imperatives, then the stock should deliver substantial gains from current valuation levels.

Image source: Flickr user StockMonkeys.com.

Todd Campbell: When activist investor Jeffrey Smith and his Starboard Value L.P. take a stake in a company and announce plans to replace the board, investors ought to stand up and take notice. Earlier this month, Smith's Starboard Value announced a nearly 10% equity stake in DepoMed, a beat-up yet fast-growing pharma company, and if Smith gets his way, this company could be trading a lot higher in a year or two than it does today.

Previously, DepoMed's shares had been caught up in the broad-based selling of companies embracing a buy-reprice-relaunch strategy. That sell-off, which came not long after DepoMed's board rejected a buyout offer at $33 per share, resulted in shares tumbling to less than $13 earlier this year.

Smith appears to think that sell-off was overdone -- and that DepoMed's board is largely at fault for failing to adequately demonstrate to investors the company's real value, much of which stems from Nucynta, a painkiller that competes with Oxycodone that DepoMed acquired from Johnson & Johnson last year. After relaunching Nucynta with a 44% price increase and a tripling of its sales force, the drug's prescription volume is soaring.

In March, DepoMed reported that Nucynta ER scripts were running 22% better in February than the year before, and in February, DepoMed said Nucynta's revenue hit $68 million in Q4. The company thinks Nucynta's success will allow it to deliver revenue of at least $485 million this year, and analysts think that will translate into EPS of $1.30 this year. If DepoMed makes good on that forecast, then Starboard Value's bet that DepoMed is undervalued is probably a good one.

Image source: Clean Energy Fuels.

Jason Hall:I'm going to go out on a limb and call Clean Energy Fuels Corp a bargain today, with a couple of caveats.

The caveats first: Clean Energy Fuels isn't (yet) profitable. The company has spent HUGE gobs of money building out a natural gas refueling infrastructure over the past several years, and its operating costs got ahead of its cash flows. Also, there's a minor matter of paying down $150 million in debt that's due by the end of August.

In other words, this "bargain" is probably better described as a solid risk-reward opportunity.

Why is the opportunity greater than the risk with Clean Energy now? Many expected the oil downturn to crush the company. To the contrary, Clean Energy saw fuel volumes shoot up 26% and 17% the past two years, while its gross margin per gallon has held relatively steady around $0.28-$0.29 per gallon.

Furthermore, the company has significantly cut capital growth spending, and its operating expenses continue to fall. Combine its lower cash operating costs with steady fuel volume growth -- and at the same gross margins per gallon at current NG prices, as when gas was twice as expensive -- and the company now produces positive adjusted EBITDA results on a quarterly basis. So far this year, the company has paid down more than $100 million in long-term debt at very favorable terms, and its improved cost structure positions it to address its remaining short-term debt and further improve the cost structure.

In other words, the short-term risk is probably much lower than the market thinks.

And the upside is enormous. Clean Energy delivered less than 310 million gallons of fuel last year, while the addressable market for natural gas to replace diesel is more than 35 billion gallons per year.

If you're willing to stomach the risk, Clean Energy Fuels shares near $3 could look like highway robbery in a few years.

Steve Symington:Given its seemingly steep stock price at over $1,300 per share, Priceline Group may not be the first name to come to mind when you think of a bargain stock. But taken in isolation from other relevant metrics, investors need to remember the per-share price of any single stock is essentially meaningless. To name one oft-used measure, for example, Priceline stock currently trades at 27 times trailing-12-month earnings and 16.5 times next year's estimated earnings -- both reasonable premiums given the company's hearty growth rates.

At the same time, the growth Priceline demonstrates to merit those premiums is strong -- but deceptively so. In its most recent quarter, Priceline's revenue increased a modest 8.7% year over year to $2 billion, helped by a 12.7% increase in gross bookings to $12 billion. However, gross bookings would have climbed 24% year over year had it not been for the negative effects of foreign currency exchange. And hotel room nights booked during the quarter came in at 99 million, good for accelerated 27% growth over the same year-ago period. As foreign currency pressures inevitably wane over time, Priceline'sactualgrowth will become much more apparent.

That said, investors should expect some pressure on Priceline in the current quarter as Europe's travel industry remains depressed following multiple terror attacks in the region in recent months. We should hear more from Priceline about the repercussions of those events -- however temporary -- when the company releases first-quarter 2016 results early next month. However, with shares still trading well off their 52-week-highs despite Priceline's strong report in February, I think patient, long-term investors should continue to enjoy market-beating returns with this global travel juggernaut.

The article 4 Bargain Stocks You Can Buy Today originally appeared on Fool.com.

Andres Cardenal owns shares of International Business Machines and Priceline Group. Jason Hall owns shares of Clean Energy Fuels. Jason Hall has the following options: long January 2017 $5 calls on Clean Energy Fuels, short January 2017 $5 puts on Clean Energy Fuels, and long January 2017 $3 calls on Clean Energy Fuels. Steve Symington has no position in any stocks mentioned. Todd Campbell has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Clean Energy Fuels and Priceline Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.