Although the S&P/ASX 200 (Index: ^AXJO) (ASX:XJO) is going to end the year around 7% higher, a number of high profile shares have suffered pretty big falls over the course of 2016.
Whether it was missing market expectations, or suffering from weaker-than-expected trading conditions, a number of these shares are now probably in the sights of contrarian investors and have had the label of ‘turnaround play’ slapped against them.
With that in mind, here are four ‘turnaround’ shares that I think could surprise the market in 2017:
Woolworths Limited (ASX: WOW)
The supermarket giant has been in a ‘turnaround’ phase for the last couple of years but the company now appears to be streamlining its business operations in an attempt to focus all of its attention back to its core supermarket and liquor business. Under its new CEO, Wooloworths has recently divested its fuels business and closed down Masters and this suggests the company could have an improved 2017 as capital is re-allocated to better performing assets.
Healthscope Ltd (ASX: HSO)
Healthscope delivered a pretty disappointing trading update in October on the back of slowing private hospital volume growth. This resulted in the shares falling around 25% and had investors questioning whether or not the private hospital sector was as robust as first thought. Despite this hiccup, I still believe the long term outlook for Healthscope remains extremely appealing and I wouldn’t be surprised to see hospital admissions pick-up over the course of the next 12 months.
IPH Ltd (ASX: IPH)
Shares of IPH have lost around 42% of their value over the course of 2016 as the intellectual property services firm failed to meet the market’s lofty expectations. On top of this, a flood of recently released escrowed shares have added to the selling pressure which has seen the shares struggle to gain any momentum. Nonetheless, IPH continues to deliver quite healthy earnings growth and is actively pursuing its growth strategy into the Asia Pacific region. The shares could easily rebound in 2017 as the market has now priced in significantly lower growth expectations.
Sirtex Medical Limited (ASX: SRX)
Although I sold all of my holdings in Sirtex following the surprise downgrade earlier this month, I still believe the shares could rebound in 2017. This, however, is based on the assumption that the company’s soon-to-be completed clinical trials deliver results that will lead to doctors choosing its treatment over a competitor. Until this occurs, I would be inclined to remain on the sidelines as the company appears to lack the necessary attributes to easily grow its market share.
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Motley Fool contributor Christopher Georges owns shares of IPH Ltd. The Motley Fool Australia owns shares of IPH Ltd. 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.