What an interesting start to the year we've had. January was a shocker for shares as worries about global growth pushed the ASX 200 down 5% over a month and a half. In contrast, February was great as economists decided that poor economic results were probably a result of abnormally cold weather in the US and other major economies, and the Australian reporting season turned out better than expected. Investors who jumped in at the beginning of February were rewarded with a 6% jump in the ASX 200 over the month.
March has been a different story however, as concerns about the Chinese economy slowing and Russia deciding it wanted the Crimean peninsula back pushed shares down 3% over the month so far.
So what trends have we seen?
Well, iron ore companies have been smashed. Notably our biggest miners have fared better than their smaller peers, and are now starting to look cheapish. Companies that performed well during the reporting season have had mixed results, while those that disappointed have seen their share price continue to plunge in many cases.
The best opportunities
For long-term investors, buying big and reliable companies when they're temporarily out of favor can often be the best investments. An example of this is REA Group Limited (ASX: REA), which is down 5% this month so far at $47, and nearly 10% off the all-time high of $52.45 reached earlier in March. REA has an extremely bright future and solid international exposure which look likely to contribute more to earnings in the coming years.
RedMed Inc (ASX: RMD) is another that looks good value at its current price. The company disappointed somewhat in late February when it reported earnings that were below analyst estimates. There is some concern that US regulatory changes will impact earnings in the future, which has kept the share price subdued. I expect the concerns will pass and RedMed shareholders will be rewarded over the next two to four years.
Finally, Rio Tinto Limited (ASX: RIO) stands out as a company that has been oversold. The recent concern surrounding the iron ore price has pushed Rio's share price down nearly 13% over the past month. I believe it has been oversold and represents a great buying opportunity for long-term investors.
Foolish takeaway
Foolish investors should always be on the lookout for quality companies at discount prices. I believe the companies above all have extremely bright futures and have been sold off harshly.
