3 big names trading at 52-week lows: Should you buy?

Are Myer Holdings Ltd (ASX:MYR), JB Hi-Fi Limited (ASX:JBH) and BHP Billiton Limited (ASX:BHP) falling knives or bargains going begging?

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While the ASX has been buoyant so far today, up 1% in early trade, the last month has seen some big falls and I think there could be more where that comes from.

Which makes me ask – are shares hitting 52-week lows buying opportunities, or falling knives that will cut you on the way down?

The answer differs from company to company and investor to investor, but Myer Holdings Ltd (ASX: MYR) is one to avoid in my opinion, while JB Hi-Fi Limited (ASX: JBH) and BHP Billiton Limited (ASX: BHP) could be moving close to 'Buy' territory.  Here's why:

Myer Holdings Ltd  – last traded at $1.8825, down 25.4% for the year

While takeover rumours early this year saw Myer enjoy considerable investor interest, now that the hype has faded the company is again trading on the fundamentals in its company reports – and they sent the share price tumbling downwards after both the half yearly and full-year reports were released.

Myer has had a shocking run of underperformance since listing on the ASX five years ago, and to my mind it has also run out of chances to say 'this year will be different'.

Part of the problem is that Myer's model is vulnerable both to online retailers and competition from other chains like Zara and H&M and I expect the company to continue to struggle to deliver rewards to shareholders over the next few years.

However the company is forecast to pay a dividend of around 7% this year which combined with analyst optimism should prevent it from sinking too much further in the short term.

JB Hi-Fi Limited – last traded at $15.16, down 27.7% for the year

JB Hi-Fi has performed significantly better than Myer over the past few years, and – in light of a tough retail market – delivered excellent results to investors with further improvement expected next year.

However the company has experienced a sell-off as investors shift to competitor Dick Smith Holdings Ltd (ASX: DSH) which offers a similar business model albeit at a lower P/E ratio.

While I believe JB can continue to grow earnings over the next few years despite subdued consumer spending, there are better retail stocks out there and investors should consider looking to companies like Premier Investments Limited (ASX: PMV) instead.

BHP Billiton Limited – last traded at $33.24, down 5.3% for the year

It's inevitable that the sustained falls in the value of iron ore dragged BHP down, its 'diversified miner' status notwithstanding.

The recent release by BHP regarding an aggressive expansion to its iron ore program has further spooked investors, sending the share down another 3% in recent days.

However, when it comes to BHP and competitor Rio Tinto Limited (ASX: RIO), don't get wrapped up in the iron ore terror.

Both companies have enormous reserves and extremely low costs of under $30 a tonne, insulating them from further market falls.

BHP's expansion is in fact a brilliant business move since it both improves the company's resilience to price shocks and increases volume; more volume could reduce prices, which in turn could drive less competitive players to the brink of extinction.

It's impossible to say where BHP might head next in a pessimistic market, but it looks a good buy at present and is an outstanding opportunity if it falls as low as $30.

But if you're not convinced, read on to discover The Motley Fool's Top Stock pick for 2015.

Midway between it's 52-week low and high points, it's neither outrageously expensive nor trading low enough to make investors nervous; an ideal state of affairs for what is arguably Australia's best offer for exposure to booming online commerce.

Don't just take my word for it, see for yourself! Simply enter your email address into the link below, and you'll immediately be directed to your juicy FREE report on one of the hottest stocks of 2015.

Motley Fool contributor Sean O'Neill owns shares in Rio Tinto.

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