MENU

2 companies at 52-week lows: Is it time to buy?

Reporting season always makes for some volatile share prices, with shareholders readjusting their expectations and occasionally being brought back to reality with a bump.

The two companies at 52-week lows in today’s article have coincidentally been covered by me several times recently, and you can find more information about the companies by clicking on the links spread throughout.

JB Hi-Fi Limited (ASX: JBH) – last traded at $16.70, down 10.1% for the year

Although it’s only down 10% in the past 52 weeks, JB Hi-Fi has actually dropped around 17% in the past few days; a big fall for such a well known and liked company.

Since its appearance in last week’s article JB Hi-Fi shares have lost more ground, with investors apparently turning to competitor Dick Smith Holdings Ltd (ASX: DSH); which recorded similar results but looks cheaper based on P/E ratios.

Personally I think JB has returned to reality after recent periods of trading above $20, however I also expect the company to recover much of its share price as investors rally behind the company again.

In light of the quality of its results in the current retail environment, and with a P/E ratio of 13 and paying a dividend of 5%, JB Hi-Fi is starting to look like a good turnaround stock.

Transpacific Industries Group Ltd. (ASX: TPI) – last traded at $0.95, up 3% for the year

After hitting a 52-week low this week, Transpacific has seen some buying with investors feeling the stock had been oversold.

It’s certainly been a shocking few days for the company, with a trading halt called just before the full year results were due to be released.

The subsequent ASX announcement revealed that Transpacific had been hit with huge increases to its provisions for site remediations – a revelation followed by a lacklustre report and a fatal accident which resulted in the grounding of the company’s entire fleet.

Thankfully for shareholders the market decided not to punish the company as much as it could have, and Transpacific will commence with a gradual restoration of services today and expects to be back to normal next week.

The recent announcements however make it difficult to objectively value the company, although I stand by my statement in my coverage of Transpacific’s results that the scale of expected future remediation provisions make it look much less attractive.

However the Group is trading 14% below analyst Morningstar’s estimate of its intrinsic value, and given the negative sentiment surrounding the company it could be a discount purchase for the right investor.

Personally speaking I like to have a little more certainty in my shares investments, and one of the companies I own recently reported substantially better results than Transpacific – and has for the past five years.

This same company is also the subject of The Motley Fool’s free report on our Top Stock for 2014 – and with such an impressive record of earnings and dividend growth, what’s not to like?

This small-cap company also escapes a lot of investor interest, which means that it’s still trading at a reasonable valuation, especially considering its future potential.

If this sounds like exactly what you’re looking for in an investment and you would like to learn more, simply click on the link below and enter your email address – it takes less than 30 seconds – and we’ll send you the full report, absolutely FREE!

The full scoop on our #1 ASX pick - yours FREE

It's not too late! The Motley Fool has issued a firm "BUY" rating on this small but ultra promising ASX company... and you can get the name and code FREE right now. Click here for your free copy of "The Motley Fool's Top Stock for 2014."

Motley Fool contributor Sean O'Neill doesn't own shares in any company mentioned.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.