The recent front page headlines about Swiss mining giant Glencore PLC potentially facing serious financial difficulties have added more uncertainty to already volatile global markets. Such shocks to financial markets keep throwing opportunities at savvy investors to load up on quality stocks at beaten-down prices.
Currently in Australia, the following four issues are weighing upon the local stock market:
- Concerns over the slowing Chinese economy
- The collapse of commodity prices
- US interest rates
- The Australian economy potentially heading towards a recession
Here are five stocks that have recently seen their prices drop, partly due to the above issues. I think they're worth a second look and maybe a spot on your watch list.
Ansell Limited (ASX: ANN) – Surgical gloves maker Ansell's share price has dropped by 36% during the last six months. Ansell's current price-to-earnings ratio (P/E) is only 10.8. This is low for a company that has achieved sales growth, margin improvement and strong free cash flow during financial year 2015. An on-market share buyback program is currently in progress to take advantage of opportunistic market conditions.
Dick Smith Holdings Limited (ASX: DSH) – This is a well-known Australian electronics retailer going through a challenging phase. Since August, the share price has dropped by 32%, after a disappointing results announcement. It is currently trading at a P/E ratio of 8.5. New initiatives are currently being implemented to improve business performance.
Commonwealth Bank of Australia (ASX: CBA) – Australia's most famous bank needs no introduction. Concerns over rising house prices and a curb by the Australian Prudential Regulatory Authority (APRA) on investor loans have had a detrimental effect on bank shares. Over the last six months, CBA's share price has dropped by 21%. It is currently trading at a P/E ratio of 13.9, with a juicy 5.75% dividend yield.
BHP Billiton Limited (ASX: BHP) – In a year, BHP's share price has lost almost 29% in value. The turmoil facing the mining sector is largely to blame for the drop in the miner's share price. But it is still one of the best mining companies in the world with a diversified portfolio of commodities and low-cost operating mines.
BWP Trust (ASX: BWP) – Bunning's Warehouse Property Trust has also seen its share price sink over the last few months. Since August, the share price has dropped by approximately 10% and now trades at an attractive P/E ratio of 9.
Foolish takeaway
Benjamin Graham often referred to financial markets as being managed by an illusionary "Mr. Market". He also said that Mr. Market can at times be manic or depressive. If we use that analogy in today's conditions, Mr. Market is clearly in a depressive state of mind and is making quality stocks available at low prices. For Foolish investors, this is a good time to grab some bargains.
