Why these 3 ASX shares have been crushed in November

Credit: Alon

It’s fair to say that November has been an eventful month for the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) with more ups and downs than one of the rollercoasters operated by Village Roadshow Ltd (ASX: VRL).

But despite this the index has managed to grind out a solid 3% gain month-to-date. Unfortunately not all shares have climbed higher this month, with three in particular being crushed. Here’s why:

Adairs Ltd (ASX: ADH)

This homeware retailer’s shares have fallen a staggering 34% in November following a shock profit downgrade at the beginning of the month. Following weak trading in the first four months of FY 2017 management downgraded sales guidance to between $265 million to $275 million from $275 million to $285 million. Just as bad is that due to discounting and lower online sales, margins are expected to come in far lower than forecast. Whilst its shares may look cheap now, I would keep away until there is a clear sign of improvement.

iSentia Group Ltd (ASX: ISD)

Shareholders of media-monitoring company iSentia have seen the value of their holdings plunge 28% in November. The decline comes as a result of a trading update released in the middle of the month which revealed that its Content Marketing segment has been severely underperforming. As a result full year revenue and EBITDA is now expected to grow in the high-single-digit range. Although this is a huge disappointment, management expects a big improvement next year. Because of this I believe the decline has presented investors with a great entry point.

SMS Management & Technology Limited (ASX: SMX)

The shares of this information technology solutions provider have dropped 24% in November after hopes of a turnaround in its performance failed to materialise. At the end of FY 2016 the company saw a deterioration in its sales pipeline and contracts wins. Unfortunately no improvement has been seen so far in FY 2017. This led to management providing half-year EBITDA guidance of between $4.5 million to $5 million, down from $11 million in the first half of FY 2016. Despite the sell off I wouldn’t recommend buying its shares. Things may get worse before they get better.

Although these hot stocks haven't been beaten down, they could still be classed as bargain buys right now in my opinion. The smart money is on them being big winners in 2017, is yours?

Big, Fat, Dividends

This company's dividend is almost the stuff of legends. Its reliable cash flows support a high payout ratio, and the company's stash of franking credits are the cherry on the top of the dividend cake. Based on the last 12-months of dividends, shares are offering a fully-franked 6.5% yield, which grosses up to a whopping 9.3%, when those franking credits are included.

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Motley Fool contributor James Mickleboro 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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