Rule #1 in investing is “buy low, sell high”, but do you do it?
Most of us probably don’t as frequently as we should. When it comes to almost anything else – a house, a car or even groceries – we do our research and try to shop for the best bargains.
Yet when stocks fall in price, we may wait to buy until it “hits a bottom”. When it finally does, a lot of investors may simply forget about it anyway, much to their regret later on when it recovers and soars. However, smart investors will circle back to see what’s on offer.
Here are three companies that have struggled and fallen, but are now on the way back up, so it may be time for value investors to circle back and reconsider them.
Trade Me Group Ltd (ASX: TME) is New Zealand’s leading online classifieds and e-commerce website that sells anything from clothes to real estate. Over the past three years, net profit flattened out and so did its share price. Going as low as $3.11 recently, it has climbed 15% since September.
New acquisitions have added such services as online payments, vehicle information and insurance comparison. Website visitors are growing as well. Management thinks solid single-digit growth with its very high margins can be achieved. That’s why investors are circling back.
Navitas Limited (ASX: NVT), the education and training provider, took a tumble when Macquarie University decided not to extend Navitas’ bridging school service program after 2015. Shares dropped from about $7 to $4.70. Since July, it has rallied 12%.
The company has time to adjust by adding new teaching programs, as well as continuing to grow overseas university programs in the US. Consensus forecasts are for earnings to grow around 16% annually over the next two years. With a 4.4% fully franked yield, the stock is looking very attractively priced at 22 times earnings.
Ansell Limited (ASX: ANN) is a big name in producing gloves and other protective wear used in warehouses, hospitals and food service. After hitting a $22 high in September 2013, the stock has gone sideways, but it is looking like it could be gaining some market momentum from investors.
Already up about 10% since mid-October, I think this stock in particular offers good value for investors. Business looks like it will pick up pace over the next two years. The company has a strong competitive advantage as the market leader in its industry, making it all the more attractive for those circling back for a solid investment.
Where to invest $1,000 right now
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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned.
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