3 beaten-down shares that could be bargain opportunities

In the last month the market has been very kind to shareholders of the likes of Breville Group Ltd (ASX: BRG), Retail Food Group Limited (ASX: RFG) and Santos Ltd (ASX: STO). During this period, each of the shares have produced returns in excess of 20%.

Unfortunately, the same cannot be said for all shares trading on the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO). Despite the market rallying in recent times there are still three shares which have made big losses during the last month. But could things be about to improve?

Bendigo and Adelaide Bank Ltd  (ASX: BEN)

The regional bank is down over 13% in the last month. This is despite the recent rally in the banking sector which has seen Westpac Banking Corp (ASX: WBC) shares climb by 5%.

While its half-year results were not incredible, the sell-off appears to be overdone. Its shares are trading at the lowest estimated forward price to earnings ratio of all the Australian banks, and look like good value now.

Bendigo and Adelaide Bank is applying for advanced accreditation from APRA. This would allow it to loan out significantly more on the same level of capital it holds currently. Should its application be approved, I would expect to see the shares rebound strongly.

Caltex Australia Limited (ASX: CTX)

Caltex shares were having a solid month until the middle of last week when everything turned sour. Its shares are down almost 13%, on the back of news that Queensland’s Energy Minister Mark Bailey has called for an investigation into the Queensland fuel market.

One company that doesn’t seem worried by this is Perpetual Limited (ASX: PPT). It has bumped up its ownership from almost 14 million shares to just over 17 million shares during the last week. This increases its ownership to approximately 6.3%.

I believe this drop in share price has now created a great entry point, and would expect the shares to climb significantly in the next 12 months.

Graincorp Ltd (ASX: GNC)

The shares of GrainCorp have lost almost 12% of their value in the last month. They may appear cheap now, but they still face strong headwinds.

At the recent Outlook 2016 conference GrainCorp chief executive Mark Palmquist didn’t paint a great picture of the industry at present. According to Queensland Country Life Mr Palmquist stated that cheap oil meant Indonesia could ship in wheat from Russia for less than the cost of taking grain from GrainCorp’s Swan Hill silo to ports in Geelong.

Similar could be said for the Middle East, also. It is now approximately $35 per tonne cheaper for the Middle East to import Ukrainian wheat. As the Middle East has traditionally been the destination of over a third of Australian wheat exports, this could be worrying for shareholders.

There is speculation that the RBA may attempt to talk down the Australian dollar in the near future. I believe GrainCorp investors will certainly be hoping this happens soon, in order to make its exports more competitive.

If the Australian dollar sinks beneath 70 U.S. cents again it could become an attractive investment. But until that happens, personally, I would keep away from GrainCorp.

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Motley Fool contributor James Mickleboro 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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