It's been a tough year if you're a shareholder of the following 3 companies. Despite an apparent quality of a business, a 30% share price decline can shake even a hardened investor. Here's my take on whether the following 3 companies remain an opportunity:
Flight Centre Travel Group Ltd (ASX: FLT) – down 34% in the past 12 months
Flight Centre has had a tough time with multiple factors impacting the company's ability to generate its previous levels of earnings. Although the company has forecast a full-year result that is only slightly below previous levels, this forecast relies on a very strong second half. So, in the near term, there is a big question mark about what price is the right price to pay for Flight Centre shares.
Looking longer term however, Flight Centre retains a strong balance sheet and has a variety of growth avenues including higher-margin tour operations in multiple countries. The business is not priced for a huge future and looks cheap at today's prices.
Vocus Group Ltd (ASX: VOC) – down 48% in the past 12 months
Shares in Vocus have been pummelled as a result of a variety of concerns including board member departures. The recent cut in dividends wasn't well received by the market either. However, at an estimated 15x full-year earnings and with further cost savings yet to be extracted, there is a good case for Vocus being underpriced.
The company continues to invest in growth both here and overseas, which will likely limit dividend growth in the medium term, but Vocus looks a good long-term investment today.
RCG Corporation Ltd (ASX: RCG) – down 32% in the past 12 months
Shares in this shoe distributor plunged after reporting bumper profits in February, as management announced a downwards revision in the company's operating profit forecast for the full year. At its midpoint, the forecast is for Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) to decline by ~4%, which makes the recent 30% decline in shares look like an overreaction – or perhaps, the company was priced too optimistically.
Either way, at 15 times earnings and paying a 5% dividend, RCG looks worthy of closer investigation at today's prices.
