Why these 4 ASX shares crashed on the market today

Are Primary Health Care Limited (ASX:PRY), Sonic Healthcare Limited (ASX:SHL), Greencross Limited (ASX:GXL), and Smartgroup Corporation Ltd (ASX:SIQ) a buying opportunity after today's falls?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

After a week or more of heavy selling, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) experienced a strong rebound today, rising almost 2% to 5005 points.

Healthcare stocks were hit hard as investors digest the recent MYEFO spending cuts, which are set to remove $639m from pathology and diagnostic imaging over the next four years.

Two stocks that rose significantly in recent days also experienced a modest decline as investors took profits. Here's what you need to know about today's falls at:

Primary Health Care Limited (ASX: PRY) shares lost 8.5% to $2.36 as shareholders dumped the stock over mounting nervousness regarding the impact of yesterday's government spending cuts. Primary's management hasn't yet quantified the likely impact on the stock, further increasing the uncertainty.

Now trading at 10-year lows, Primary shares are starting to look interesting as the company is likely to enjoy robust demand for its services over the long term. However, given the uncertainty regarding the impacts on its revenues and profits, shares could well fall further from here.

Sonic Healthcare Limited (ASX: SHL) also lost 5% to $17.51 today on investor concerns regarding its pathology and diagnostic imaging business. Sonic shares have been buffeted by a few upsets recently such as the loss of a touted Canadian contract as well as average profit growth.

Like Primary, Sonic is likely to experience reliable long-term demand, and has the added advantage of a better balance sheet and significant international revenues to counterbalance Australian spending cuts.

Junior imaging competitor Capitol Health Ltd (ASX: CAJ) also fell hard today, losing 12% to $0.26.

Greencross Limited (ASX: GXL) – down 3.5% to $5.77

Greencross shares soared 30% yesterday on the back of reports in Fairfax media that stated a private equity buyer was in the market for up to 14.99% of the company at a price of $5.79 per share. Greencross rose as high as $6 yesterday before being sold down today as investor enthusiasm cooled off.

Despite yesterday's rise, Greencross shares still look cheap today and I expect any takeover offer will have to pay a price well above $6 in order to get shareholders on board, bearing in mind the company's growth prospects.

Smartgroup Corporation Ltd (ASX: SIQ) – down 5.8% to $4.67

Like Greencross, shares in novated leasing business Smartgroup Corporation declined as investors took profits following a 25% rise on Monday. Shares in Smartgroup have risen more than 200% since listing on the ASX last year, yet despite this the company trades on a Price to Earnings (P/E) ratio of approximately 19x earnings, which is not expensive given that it is posting double-digit growth.

The real question is what will happen when Smartgroup comes into competition with larger peers like McMillan Shakespeare Limited (ASX: MMS). For the time being however, Smartgroup could make a decent growth investment.

Motley Fool contributor Sean O'Neill owns shares of Greencross Limited. 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.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

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

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

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

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

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 (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

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

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

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

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

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

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »