Is it time to buy DuluxGroup Limited, Cardno Limited and Bradken Limited?

Despite a fall in their share prices last week, DuluxGroup Limited (ASX:DLX), Cardno Limited (ASX:CDD) and Bradken Limited (ASX:BKN) may still be best off remaining on the watchlist.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Last week was a shocker for shareholders in DuluxGroup Limited (ASX: DLX), Cardno Limited (ASX: CDD) and Bradken Limited (ASX: BKN) with these three stocks falling 10.5%, 18.5% and 12.8% respectively.

In contrast the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) finished the week 1.2% lower.

That's a painful experience for shareholders, however, with these stocks now trading at significantly lower price levels than just a few days ago, it could be worth taking a look to see if any have fallen into value territory…

DuluxGroup's share price sank despite the leading paint manufacturer and building supplies group posting a solid set of half-year results last week. Those results showed a 4% lift in sales, a 9% increase in profits and a 10% increase in the dividend.

Last week's fall needs to be viewed in a wider context. The stock has gained nearly 130% in the past five years and currently trades on an above average market multiple, so despite the double-digit decline, long-term shareholders are still sitting on healthy gains.

Even at Friday's close of $5.86 the market would still appear to be pricing in robust earnings growth thanks to a booming housing construction market. The latest results, while good, perhaps don't justify the premium so it may be best to wait and see if this quality business gets any cheaper.

Cardno's share price has been on a rollercoaster ride with the stock sinking to a fresh decade low after the professional infrastructure and environmental services group announced a further downgrade to its profits, before jumping later in the week on speculation that the company was "in play".

The news that an (as yet unknown) investor has grabbed a 10% stake in Cardno is certainly interesting given the beaten up state of the shares. However for now investors are probably best sitting on the side-lines until more news emerges.

Bradken's shares price fell despite no negative (or positive for that matter) news being announced. Like Cardno, Bradken is also a beaten-up stock with exposure to the struggling mining services sector and subject to takeover speculation. The sell-off in its share price could be the market taking the view that no change of control event will eventuate. If the market has this right, investors will need to focus on underlying value to re-rate Bradken rather than a takeover premium.

Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »