With the market dancing around five-year highs, there’s a surprising number of familiar names hitting their lowest point in the past week. Wotif.com Holdings Ltd (ASX:WTF), Webjet Limited (ASX:WEB), Seven West Media Ltd (ASX:SVW), STW Communications (ASX:SNG), Super Retail Group Ltd (ASX:SUL), FlexiGroup Limited (ASX:FXL), Freelancer Ltd (ASX:FLN) and Trade Me Group Ltd (ASX:TME) are all at 52-week lows and for the most part, without any real reason.
A lot of these stocks have been favourites of Foolish contributors at one time or another, so does their current price represent an irresistible opportunity?
Wotif fell off a cliff in January after releasing a market update indicating an 18% decline in expected profit for the year (which has since materialised). According to the annual report this is due to increased investment in technology and marketing which may or may not pay off in future years. Barriers to entry in this sector are very low and competition is increasing from other websites like hotels.com, but Wotif is down over 50% which could be an attractive purchase for the right investor.
Although recording a 35% (!) increase in net profit in its latest half-yearly results, Webjet is another company down nearly 50% in the past few months. In response to an ASX price query, the company blamed adverse media coverage for its poor price performance and reiterated its full-year guidance. Similar to Wotif.com above, there are low entry barriers to this sector but the share price is appealing and Webjet’s recent results are impressive.
Seven West Media
There were rumours of ‘discussions’ with Fairfax Media that were quashed by Seven in March, and its share price has trended steadily downwards since. It looks as though speculators may have been holding the company in hope of merger activity, and are quietly selling out after the announcement. Seven is not my idea of a profitable investment owing to stiff competition, high debt and the transition away from ‘traditional’ television.
STW follows the general trend of this article, reporting a 12.5% growth in net profit (although only a 2.5% increase in per-share earnings) alongside a 17% decline in share price. At its current price it pays a 6.9% dividend and looks likely to deliver steady profit growth over the coming years as it enhances its ANZ market position and expands cautiously into Asia.
Trade Me Group
The last of the five tech stocks in this article, Trade Me Group is one of New Zealand’s leading online advertising and sales websites, not unlike a Carsales.com. Its results haven’t been too flash this year, with a 2% increase in per share earnings corresponding to a 24% price decrease. New Zealand’s economy is quite strong at the moment which should improve listings; however increasing per-share earnings look likely to be a challenge for this company in the future.
Of the companies listed here, Webjet and Wotif belong on your watchlist, while the bargain-hunter might consider STW Communications. Flexigroup and Super Retail Group are excellent buying opportunities, with the latter the latest household name to enjoy a 40% haircut this year.
5 stocks under $5
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*Extreme Opportunities returns as of June 5th 2020
Motley Fool contributor Sean O'Neill owns shares in The Reject Shop and Coca Cola Amatil.
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