While Australian investors were resting on Friday night after the drama of a trading week which saw the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) fall 2.1%, US investors were grappling with a serious sell-off in the Dow Jones which lost 1.8% in the space of just Friday's trading session.
The Dow's performance over the course of last week was also worrying, clocking up a 3.7% decline, capping off the worst week for the index in three years.
The cause of the drop in the Dow Jones was the same as what's been driving stocks all week – oil! On Friday, the price of a barrel of oil dropped below US$60 for the first time since July 2009.
Get set for a big fall on Monday!
The ASX will almost certainly lose ground at the open and it wouldn't be surprising to see the market open down around 1%.
With just 11 trading sessions left for 2014, pressure will be on fund managers to protect their portfolios from the current volatility and before they rule off their performance on 31 December – this could lead to a wave of selling.
Are there opportunities amongst the sell-off?
While it may be too early to wade back into oil and gas or iron ore stocks, there are a number of companies with appealing long-term growth potential that last week hit new 52-week lows.
AGL Energy Ltd (ASX: AGL) is forecast to earn 93 cents per share (cps) and pay a dividend totalling 65 cps in FY 2015. With the share price down to $12.69 the stock is trading on a forward price-to-earnings (PE) multiple and yield of 13.6x and 5.1% respectively.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is forecast to earn 54.8 cps and pay out 47 cps. With the shares closing at $13.79 this equates to a PE of 25.2 and yield of 3.4%.
3P Learning Ltd (ASX: 3PL) – undertook an initial public offering (IPO) in July this year at an issue price of $2.50. 3P is a leading online education software provider of products including Mathletics. With the shares now at just $2.06, the stock still looks pricey but it could be worth researching.
