Lately, the number of shares hitting 52-week highs has been substantially greater than those at 52-week lows. The companies that do hit new lows are usually exposed to the resources sector, and that is true in today's article as well. However, one stock fell after announcing an earnings-accretive acquisition – not the usual way of things at all.
Here's what you need to know about the latest falls at these 3 companies:
Ainsworth Game Technology Limited (ASX: AGI) – last traded at $2.21, down 1% for the year
Shares in Ainsworth plunged last week after the company announced the acquisition of Nova Technologies LLC for US$38 million. Expected to complete in the first quarter of 2016, the acquisition will expand Ainsworth's gaming operations and is expected to grow earnings as well as provide opportunities for Ainsworth to sell to Nova's existing customer base.
Why shares fell is uncertain, although it could be that investors were nervous about Ainsworth taking on extra debt to make the acquisition. However, the US and Latin America markets remain key growth avenues for Ainsworth, and with shares down some 30% from recent heights the company could be worth a closer look.
Aurizon Holdings Ltd (ASX: AZJ) – last traded at $4.36, down 5% for the year
Meanwhile, shares in Aurizon have also had a shocking December after delays to the company's UT4 submission to the Queensland Competition Authority regarding rail access charges for using Aurizon's network.
This was compounded by a recent market update which saw shares fall by 15% after Aurizon announced continued business pressures thanks to the weak iron ore and coal markets, as well as a $215m write-down on the carrying value of some of Aurizon's assets.
There is a big question mark over the profitability of many iron ore and coal miners at the moment, which potentially means that worse could be in store for Aurizon.
ALS Ltd (ASX: ALQ) – last traded at $3.66, down 32% for the year
Shares in ALS began falling back in 2014, when the company announced its first profit downgrade on the back of weaker business conditions, in part caused by falling commodity prices. Shares recovered some ground, until they were pummelled again recently by a discounted capital raising.
Management has continued to diversify ALS' list of services, and the company operates in a number of industries unaffected by commodity prices, although the resources sector remains a significant contributor to earnings. The Life Sciences segment in particular is growing well, and although I expect ALS' earnings to remain subdued over the next few years, I also believe that earnings are unlikely to deteriorate significantly from here.
I don't believe shares will fall much further in the absence of any further bad news.
