Gold miners are still doing it tough, with subdued prices cramping earnings. Those without debt and with better quality mines are performing better, but even standout performers like Silver Lake Resources Limited (ASX: SLR) have been hit. The two other companies in today’s 52-week lows I’ve written about recently as potential turnaround candidates for next year.
Silver Lake Resources Limited – last trading at $0.34, down 56% for the year
After exiting the ASX 200 Index earlier this year, Silver Lake Resources has been on a steady downwards slide, hitting 34 cents yesterday afternoon. It’s a far cry from prices of $1 realised in the heady days of September last year, largely as a result of some negative company news in March. A capital raising increased the number of shares on issue by 15%, and the Murchison mine was placed on care and maintenance until the gold price improves.
Although neither of these factors are good news, Silver Lake is looking cheap with a Price/Book ratio of 0.36 and it’s definitely one to add to the watchlist for when the gold price looks set to improve. However if the gold price gets worse, expect Silver Lake to drop in value as well.
Mermaid Marine Australia Limited (ASX: MRM) – Last traded at $2.11, down 31% for the year
I covered Mermaid Marine just yesterday as an ASX share on sale at a surprisingly low price. After that article was published, Mermaid rebounded 4.5% to $2.11 (up from $2.02), but could still be a bargain with the prospect of better times in 2015.
A 29% decrease in profit and negative sentiment around the purchase of competitor Jaya (funded by debt and a share issue) has sent Mermaid Marine to its lowest point all year, but gas exports commencing on the east coast will provide plenty of opportunity to win new contracts. Factor in new revenues and growth from Jaya and I think Mermaid Marine is a good candidate for a turnaround story. Looks to have gone roughly as low as it will go in the absence of further bad news.
Alliance Aviation Services Ltd. (ASX: AQZ) – last traded at $1.135, down 35% for the year
Another turnaround candidate for 2015, late starts to contracts and missed opportunities have reduced Alliance Aviation’s earnings for this fiscal year, a decline reflected in its share price. However I get the feeling the market may have missed the point, with 2015 shaping up to be a whole lot better.
Based on contracts that have already been secured, Alliance’s profit will be in the range of $18-21 million for FY2015, up from $12-13 million currently – an increase of 50%, and maybe more if the company wins new contracts. The company also recently won its largest contract ever with BHP’s Iron Ore division, which lends credibility to the company and may act as the seal of approval necessary to win more contracts.
Alliance Aviation is definitely the pick of this week’s lows; it’s cheap, should have a substantially better year in 2015, and if the company raises dividends in line with earnings I wouldn’t be surprised to see a dividend of >10% (at today’s price) in 2015. Not coincidentally Alliance is at the top of my list for my next acquisition. If you’re after more small-cap stock ideas, check out The Motley Fool’s free report on another small cap company, one I’ve personally owned for over a year. Its underlying business is improving at a cracking rate and it seems to be flying beneath the radar – for the moment. You can read all about it here: