10 stocks trading near 52 week lows
By Mike King - June 5, 2012
With the market getting smashed almost every other day, many stocks have seen their shares trading at their lowest levels in a year. Stocks hitting these lows can be a fertile hunting ground for bargains, as well as a dumping ground for what I’d call ‘ordinary’ stocks (and not in a good way). Sorting through them to work out which ones may offer some value and which ones are the dogs is the difficult part.
Here’s a select list of stocks hitting 52 week lows from a broad range of sectors, which are currently on sale at depressed prices.
|Company Name||Market Cap||Current Share Price ($)||52 week low ($)||Trailing P/E ratio|
|Australian Agriculture Company (ASX: AAC)||360m||1.15||1.11||23.5|
|Bradken Limited (ASX: BKN)||897m||5.54||5.45||10.2|
|David Jones Limited (ASX: DJS)||1,110m||2.13||2.11||7.6|
|Kathmandu Holdings Limited (ASX: KMD)||209m||1.04||1.02||8.0|
|Myer Holdings Limited (ASX: MYR)||1,070m||1.84||1.84||7.7|
|Reece Australia Limited (ASX: REH)||1,780m||17.90||17.90||15.3|
|Seven West Media (ASX: SWM)||1,400m||2.17||2.17||5.1|
|Sims Metal Management (ASX: SGM)||2,100m||10.21||10.09||n/a|
|Ten Network Holdings Limited (ASX: TEN)||669m||0.64||0.66||n/a|
|The Trust Company (ASX: TRU)||154m||4.62||4.62||12.0|
Source: Australian Financial Review and Google Finance
It is important when researching shares to determine whether a company’s earnings are sustainable. Larger companies are often the dominant, established participants in their industries. While that provides some help, it doesn’t make the shares immune from management shortcomings (such as a disastrous acquisition) or industry decline. From the list above, I’ve written some brief thoughts on a couple of them.
David Jones versus Myer
If retailing recovers – which it should at some stage – David Jones at least has a competitive advantage with exclusive brands and products that are seen as much better quality than Myer. DJs appears priced for possible extinction – or at least long term poor performance. Despite the company’s recent woes, analysts still expect the company to pay a dividend yield of over 7% in 2012 and 2013.
Reece provides bathroom and plumbing supplies, mainly to tradespeople. Amid fears surrounding the threat Bunnings, owned by Wesfarmers Limited (ASX: WES) and Woolworths Limited’s (ASX: WOW) Masters pose, Reece has seen its share price slammed. A slowing construction industry hasn’t helped either.
Reece is majority owned by the Wilson family (around 60%) and doesn’t really cater to the D-I-Y handyman, so it really operates in different markets to Masters and Bunnings. With an average return on equity of over 19% in the last three years, despite revenues growing at just 3%, Reece could be a stock for the watchlist.
The Trust Company
The Trust Company I’ve written about before, in this article, and at these low prices becomes even more interesting.
Which ones would I bypass?
Kathmandu, Sims Metal and Ten. All three are in pretty ordinary businesses. They either have low returns on equity (Ten, Sims), poor profit margins (Sims) and little or no competitive advantage (all three).
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Motley Fool contributor Mike King owns shares in Woolworths. The Motley Fool‘s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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With the market getting smashed almost every other day, many stocks have seen their shares trading at their lowest levels in a year. Stocks hitting these lows can be a fertile hunting ground for bargains, as well as a dumping ground for what I?d call ?ordinary? stocks (and not in a good way). Sorting through them to work out which ones may offer some value and which ones are the dogs is the difficult part.
Here?s a select list of stocks hitting 52 week lows from a broad range of sectors, which are currently on sale at depressed prices.