With the ALL ORDINARIES (INDEXASX: ^AXAO)(ASX: XAO) index down almost 15% in the past 12 months, investors could expect to see a number of shares at new lows.
Surprisingly however, many of this week’s victims are in the retail sector, and not the troubled banking or mining sectors. Here’s what you need to know:
Vitaco Holdings Ltd (ASX: VIT) – last traded at $1.57, down 34% for the year
Vitaco shares initially sank after the company swung to a loss of $15 million at its most recent interim report, largely due to the expenses of listing on the ASX ($15 million), redundancy and integration costs associated with an acquisition ($7 million) and a one-off senior debt contract closure ($1.7 million). However, Vitaco shares crashed again this week along with a number of similar businesses over fears regarding new import restrictions in China.
Stripping out the one-off costs, Vitaco does not look expensive at today’s prices, and I do not believe shares will fall further in the absence of any bad news.
Super Retail Group Ltd (ASX: SUL) – last traded at $8.22, down 20% for the year
Like Vitaco above, shares in Super Retail Group crashed after the company reported a decline in normalised profit for the six months to February, despite strong overall sales growth. It seems investors were concerned about the underperformance at Ray’s Outdoors stores, as well as a decline in performance in the Leisure segment as a result of ‘competitive pricing, stock clearance, and higher sourcing costs.’
Retail businesses have generally been out of favour on the ASX recently, but Super Retail has a strong history of performance and investing in itself to drive sales, and investors should not overlook it.
Pacific Current Group Ltd (ASX: PAC) – last traded at $4.67, down 66% for the year
Pacific Current Group, formerly known as Treasury Group (TRG), is an interesting opportunity for investors. The Group invests in a variety of global boutique fund managers, and shares crashed recently after one-off non-cash expenses lead to a statutory loss after tax – although Pacific’s actual cash generation remained strong. Pacific’s future dividends will likely be lower (payout ratio of 60-80%, compared to 95% in the last half), but appear sustainable and quite sizeable compared to the company’s share price. Additionally, shares trade hands for just over half of the value of the company’s Net Tangible Assets.
A key risk is the recent appointment of a new CEO just six months ago, while another downside is the complexity and diversity of the company’s investments and reporting, which could make it hard for the average investor to understand. Treasury Group definitely appears worth a closer look, however.
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Motley Fool contributor Sean O'Neill has no position in any stocks mentioned. 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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