Coal, insurance, and garbage are the industries in this week's 52-week lows.
Prices, storms, and management changes are the specific catalysts driving the falls; 'No', 'Yes', and 'Maybe' are the answers to 'should I buy these companies?'
Let's take a closer look:
New Hope Corporation Limited (ASX: NHC) – last traded at $2.13, down 30% for the year
Despite a positive half-year report, investors are clearly buying into (or rather, selling into) the storm clouds facing the coal sector.
With Chinese steel demand falling, the demand for metallurgical or 'coking' coal is dwindling, while renewed pressure to reduce emissions and the viability of alternative energy sources is thought to be hampering the demand for thermal coal.
Margins have been squashed and with Rio Tinto Limited (ASX: RIO) coal boss Jean-Sebastien Jacques claiming there won't be a coal recovery for a long, long time, New Hope doesn't look like a great medium-term investment idea.
With many other options out there, I would not buy into New Hope's recent slump.
Insurance Australia Group Ltd (ASX: IAG) – last traded at $5.54, down 5% for the year
IAG shares have copped a hiding in recent months as the full impact of storms in NSW and Queensland has become apparent to shareholders. Costing up to $300 million more than the $700m IAG had set aside for natural disasters, shareholders have steadily sold the company back to where it was a year ago.
Ironically a good portion of the initial share price increase was due to IAG's strong dividend and double-digit profit growth earlier this year. While dividends are expected to fall I still wouldn't be surprised to see IAG pay 6% yields on today's prices.
Insurance companies naturally experience bumpy earnings from time to time, and buying them after the impact of unforeseen circumstances (natural disasters causing high claims) can be a good way to reduce your risk and maximise your returns in future years. I am considering buying IAG shares at their current price.
Transpacific Group Industries Ltd. (ASX: TPI) – last traded at $0.715, down 37% for the year
Transpacific's situation is a little more opaque. Reformist CEO Robert Boucher resigned suddenly yesterday in order to return home to the United States for personal reasons. Chief Financial Officer Mr Brendan Gill has been made acting CEO until a replacement can be found.
Mr Boucher has agreed to be available to assist Mr Gill until a replacement can be found, and will not receive any form of severance, bonus, or incentive payments associated with his exit.
This is a tough one to fathom. Life can interrupt even the most promising endeavours, and it is right that Mr Boucher should return home if needed there. On the other hand investors clearly had a lot of faith in the CEO who was leading Transpacific through major reforms.
Much will hang on the capabilities of a future CEO and his integration with the existing team; given that the business is still in transition and there are many uncertainties I would consider Transpacific a hold until the situation becomes clearer.
