With the ASX hitting a four-month low earlier this week, it was inevitable that a number of stocks – including those that make up a large part of the index – were dragged down with it.
Westpac Banking Corp (ASX: WBC) makes up a fair part of the index all on its own, and its downward slide began after lacklustre results were reported back at the beginning of May.
However a number of other factors including ASIC investigations, the prospect of increased bank capital requirements, a slowing Australian mortgage market and more have forced the share price even lower this week. While hitting a 52-week low may trigger a wave of bargain hunters and yield seekers – it's got a 5.8% fully-franked dividend – I think prices will trend down further over the next two years or so.
Mortgage broker Yellow Brick Road Holdings Ltd (ASX: YBR) is also feeling the sting of apparent investor nervousness over a slowdown in the Australian mortgage market. The big four banks have already agreed to limit investor lending growth to 10% a year, and with some parts of the nation facing a housing bubble, there are obviously fears over what might happen when it pops.
I do find shares appealing at today's prices, but movement up or down depends entirely on what happens in the residential lending market, as that is where YBR makes most of its money.
Education provider Affinity Education Group Ltd (ASX: AFJ) has fallen hard in recent months on no apparent news, although fears over changes to childcare in the budget (which didn't materialise) may have played a part.
Affinity is also currently a loss-making business, and fears over the budget may have taken enough of the gloss off to prompt a re-rating in the stock. While the company should become profitable or close to 2015, occupancy levels of 80% (below the coveted 90%) may also be concerning.
It's difficult to evaluate whether Affinity will rise or fall further from here, and I think much will hinge on the contents of its half-yearly report when that comes out.
Grocer Metcash Limited (ASX: MTS) jumped into the spotlight today after a horror announcement sent it tumbling to a 14-year low. Cancellation of the dividend for at least 18 months, and some $640 million in write-downs knocked the stuffing out of shares and shareholders. I'd say the spin-off of its automotive division is a given at this point.
(You can find the full coverage of Metcash's shock announcement in Brendon Lau's article here)
In-Vitro Fertilisation clinic Virtus Health Ltd (ASX: VRT) shares continue to dive as a shock announcement impacted that stock as well. Despite having confirmed earnings guidance as recently as February, Virtus revised its forecasts from 'low to mid-teens' to 'low-to-mid-single digit' percentage growth in Net Profit After Tax (NPAT). Shares don't look like a buy at current prices and could well go lower.
