Are these 10 shares the biggest bargains in the S&P/ASX 200?

The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is down nearly 10% since the start of this year, and more than 20% since March 3, 2015, when the index threatened to breach the 6,000 point mark, hitting a high of 5,996.90.

Now the index is sitting at 4,786.10, well off the 5,295 points it closed at on December 31, 2015.

Turmoil is wracking global markets, and fearful investors are pulling the plug on their investments.

As Warren Buffett famously noted, “Be fearful when others are greedy, and greedy when others are fearful”, which suggests now might be the time to be greedy. By that he means that there should be plenty of shares trading on the market at cheap prices (below their intrinsic values). When you also consider that the best time to buy shares in recent times was in March 2009 – at the height of the global financial crisis (GFC), that too was a time of fear.

In looking for bargains, I’ve scoured the ASX 200 looking for those companies that have seen their share prices plunge the most year-to-date (YTD). Here are the top 10 worst performers…

Company Last price Fall YTD
Select Harvests Limited (ASX: SHV)  $4.71 45.2%
Ozforex Group Ltd (ASX: OFX)  $1.87 42.6%
Ten Network Holdings Limited (ASX: TEN)  $1.005 39.1%
Liquefied Natural Gas Ltd (ASX: LNG)  $0.52 37.3%
Mesoblast limited (ASX: MSB)  $1.17 35.5%
Worleyparsons Limited (ASX: WOR)  $3.27 34.2%
BT Investment Management Ltd (ASX: BTT)  $8.46 33.0%
Incitec Pivot Ltd (ASX: IPL)  $2.73 31.5%
Slater & Gordon Limited (ASX: SGH)  $0.59 30.4%

Source: Yahoo Finance

There’s nothing very attractive about any of these companies – as you might expect.

Whitehaven is weighed down by sinking coal prices and may even be struggling to make a profit. Select Harvests announced a 10-15% fall in almond spot prices in mid-January, which will impact on revenues and earnings.

Liquefied Natural Gas may have seen its business opportunity in exporting gas from the US evaporate in the face of falling oil prices. Worleyparsons services the oil, gas and resources companies but its customers are slashing their expenditure. Incitec’s explosives business likely faces similar pressures from resources companies cutting their spending.

Lawyers Slater & Gordon face an uncertain future and question marks over whether the business can continue. Ten Network is the ugly stepsister to Channels Seven and Nine in a structurally declining sector – free-to-air TV.

Ozforex has recently downgraded its profit forecast and terminated a takeover offer from Western Union. Mesoblast had a disastrous second listing on the NASDAQ which is still being felt on the ASX shares and finally, fund manager BT Investment is feeling the heat from falling markets.

Of the 10 shares listed above, I’d personally be avoiding any that are dependent on resources or energy commodity prices, which knocks out LNG, Worleyparsons, Incitec and Whitehaven. Slater & Gordon has a real lack of transparency into its financials which is an instant ‘avoid’ for me. A structurally declining sector means Ten is also out; Mesoblast could be either very cheap or very expensive, but until the company makes a profit, it’s highly speculative.

Foolish takeaway

That leaves just three companies that may have been unnecessarily oversold, Select Harvests, BT Investment and Ozforex, and may be worthy of further investigation.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

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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