Looking at this year's biggest fallers can sometimes prove a fertile hunting ground for the penny-pinching investor. Of course, sometimes you'll just end up catching a falling knife. Here's my take on whether these 3 big fallers are an opportunity today:
RCG Corporation Ltd (ASX: RCG) – last traded at $1.02, down 33%
Shares in RCG Corporation Ltd (ASX:RCG) have been sold off heavily following the recent announcement from the company downgrading its profit for the year. RCG was probably priced too optimistically for a company whose profits would fall, but after the sell-off the company is looking much better value.
A 6% dividend plus franking credits makes RCG shares look appealing for the dividend investor.
Blackmores Limited (ASX: BKL) – last traded at $106, down 48%
Like RCG above, Blackmores was also sold off after its first quarter sales came in well below expectations. The company was reportedly caught out by de-stocking at its customer chains and this resulted in a huge blowout in debt and inventory (since it ordered products but could not sell them). Fortunately the company's debt pre-blowout was minimal, and once this situation is behind it Blackmores can get back to focussing on growing its sales in foreign markets, especially China.
Blackmores looks interesting at today's prices.
Xenith IP Group Ltd (ASX: XIP) – last traded at $2.08, down 46%
Shares in patent lawyer Xenith IP took a hit after weak results in February saw profits plunge despite a big increase in revenue. Reportedly due to the costs of integrating recent acquisitions, underlying profit also fell 5% to $3 million in the first half. That is not a good result for a company with a market capitalisation of $180 million.
However, investors should also remember that recent acquisitions are expected to add significantly to profit, as well as result in significant cost savings once integration is completed. For investors willing to look beyond 2017, Xenith could be worthy of closer investigation.
