Is it time to pounce on Woolworths Limited, Woodside Petroleum Limited, and Suncorp Group Ltd?

Credit: Pieter van Marion

Would you believe that the S&P/ASX 200 index is at a two-and-a-half year low?

It sure doesn’t feel like it. We’ve seen some major selling off of resource and bank stocks recently, yet the rest of the ASX appears to be fairly ‘business as usual’. The selling appears to be concentrated in the big names, which drags the entire index down.

Certainly we have some old investor favourites returning to the 52-week lows list this week:

Suncorp Group Ltd (ASX: SUN) – last traded at $11.33, down 18% for the year

Suncorp shares fell off a cliff earlier this week after the company released a pretty vague announcement declaring a ‘significant’ reduction in underlying margins for the first half of this year. Insurance share prices are prone to bouncing around as claims and margins can both fluctuate wildly, and they are better suited to calm investors.

Although I have written recently on the fact that competition and a weaker domestic economy are likely to hold Suncorp and Insurance Australia Group Ltd (ASX: IAG) back over the next few years, Suncorp is an attractive, secure investment for dividend seekers and could be worth picking up after the recent falls.

Woolworths Limited (ASX: WOW) – last traded at $22.49, down 25% for the year

Woolworths is often seen as another attractive investment for dividend-seeking investors, although I wouldn’t buy in just yet as I feel that there could be worse to come with competition from Aldi and Wesfarmers Ltd (ASX: WES). Additionally, I feel that the company needs a CEO as the recent backflip over Qantas Airways Limited (ASX: QAN) rewards points for Woolworths loyalty card users.

While I consider it a positive that management had the courage to admit –and correct – a mistake, they say a ship with no hand on the tiller goes in circles and I am concerned this could happen at Woolworths.

Woodside Petroleum Limited (ASX: WPL) – last traded at $26.20, down 24% for the year

Lastly, Woodside Petroleum is finally seeing its share price slide as investors realise the company is not immune to ultra-low oil prices. Indeed on a conventional basis, Woodside appears quite cheap as it trades on a trailing Price to Earnings (P/E) ratio of 8, which is roughly half that of Oil Search Limited (ASX: OSH).

With decent cash flows and great assets, Woodside is in the best position to weather the oil downturn, although prices are still falling, squeezing margins. Overall, I expect that Woodside shares could take a further dive as profits and dividends fall again this year.

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Motley Fool contributor Sean O'Neill has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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