3 companies near 52-week lows — is this the bottom?

Many institutional investors have very strict policies in place to mitigate risks and protect your money in case of a downward spiral.

Unlike individual shareholders, who may decide to wait for a few more weeks or months before they decide to dump their holdings, these large financial companies cannot afford to wait because they usually handle billions of dollars.

They usually have trading software that is configured to sell any company that crosses the 52-week low line. Because their holdings are large, any sell order from any of those institutions could drive down the stock price to even lower levels – hurting individual investors like us.

Keeping an eye on companies nearing 52-week lows is also useful for investors interesting in snapping up shares of their favorite companies while they’re out of favour or otherwise temporarily depressed. If you’re confident in a company’s future despite short-term troubles, then a low could mean opportunity.

  • Qantas Airways (ASX: QAN) is currently the fifth worst airline in the world by profits as explained in my last article and the current stock price of just $1.25 as of October 31 is just $0.07 (5.06%) from its 52-week low.
  • Gud Holdings (ASX: GUD) was the loser of October 31, dropping 6.9% to $5.93 or just $0.34 (5.73%) away from a yearly low.
  • Paladin Energy (ASX: PDN) was the second loser on October 30 dropping 7.2% to $0.38, which is the 52-week low price.

Foolish takeaway

These companies are very close to the edge. Consider yourself warned. If you’re already planning to sell, you might want to do it before a supercomputer at your bank beats you to the punch. If you’re looking to buy, add these companies to your watch list and make sure you know why they’re down and out before you risk your own hard-earned cash.

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Motley Fool contributor Alejandro Guillú Mendoza does not own shares in the companies mentioned here.