3 companies hitting 52-week lows: Is this the bottom?

Here’s why MMA Offshore Ltd (ASX:MRM), Japara Healthcare Ltd (ASX:JHC) and Fortescue Metals Group Limited (ASX:FMG) are all hitting 52-week lows this week.

| More on:
a woman

It will come as no surprise that two out of three companies in today’s article are in the commodities sector, and have been hit hard by falling oil and iron ore prices, respectively.

But the third, a recent healthcare IPO, has surprised investors by plummeting recently.

What’s going on?  Stay tuned and I’ll tell you.

MMA Offshore Ltd (ASX: MRM) – last traded at $0.85, down 67% for the year

MMA Offshore, formerly known as Mermaid Marine (hence the MRM ticker), is a services company that provides vessel contracts of various forms – Vessels, Supply Bases, and Slipway – to offshore oil and gas companies.

Considering MMA doesn’t actually produce any oil or gas itself and instead relies on contracts from the producers for its income, its recent savage falls from prices of above $2 are understandable.

With capital expenditure being slashed in the industry and companies looking to renegotiate contracts, macroeconomic factors for MMA are not looking good.

I do like the company thanks to its recent expansion into south-east Asia, and there is a significant chance that oil markets will rebound later in the year or in 2016.

However the potential for lower profit margins and limited new contracts – and the risk of the oil market taking longer to recover – makes me believe that MMA is a ‘Hold’ at best for the moment.

Its share price could conceivably drop further if the oil price declines or if it becomes apparent that low prices are having a significant knock-on effect on MMA’s contracts.

Japara Healthcare Ltd (ASX: JHC) – last traded at $1.89, down 23.8% for the year

Japara, a residential aged care provider in four Australian states, experienced a heavy sell-off in its shares after a payroll dispute in December cost the company around $5 million dollars.

Management did not inform the market as the dispute was not deemed to be material to the company’s ongoing valuation (since the figure is such a small percentage of the company’s assets and cash earnings).

Shareholders would prefer to have been told, and the subsequent sell-off has been sizeable, with the company declining from $2.60 in November to recent prices of $1.89.

Nevertheless the market for Japara’s services is strong and growing rapidly, and one Foolish contributor believes that the company is the pick of the aged-care operators listed on the ASX thanks to high management ownership, strong financials and the absence of single controlling stakeholders.

I believe Japara has gone as low as it will go in the absence of any bad news, and could be set for a strong recovery in 2015.

Fortescue Metals Group Limited (ASX: FMG) – last traded at $2.05, down 60% for the year

Poor Fortescue Metals, on the nose again after what has already been a shocking year.

Unfortunately the company is at the mercy of the iron ore price, and is going to continue yo-yo-ing until its financials strengthen, ore prices firm up, or both.

Until then it’s difficult to put any firm guidance on where the company is headed, particularly given the potential for surprise adverse events to smash Fortescue’s share prices further.

The pick of today’s article is definitely Japara, with its defensive business model, growing demand and strong financial position.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

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

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

The share price of ASX infant products retailer Baby Bunting Group Ltd (ASX:BBN) has been a solid performer so far …

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

A new landmark report by the Intergovernmental Panel on Climate Change (IPCC) was released earlier this week. It provided a …

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest …

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos Limited (ASX: AMS) share price has been on a tear this past week, rising 15% on the back …

Read more »

asx share price competitions represented by businessmen arm wrestling
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

Online furniture retailer Temple & Webster Group Ltd (ASX: TPW) had a breakout year in 2020, moving from relative obscurity …

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

Shares in ASX healthcare company Polynovo Limited (ASX: PNV) almost doubled in price last year. And, despite a shaky start …

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

Investing in other geographic markets has become a popular way to diversify a portfolio. The risks associated with being exposed …

Read more »

person reading news on mobile phone
⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

Despite the News Corporation (ASX: NWS) share price getting a 31% bump between November last year and today, News Corp …

Read more »