How I would invest $10,000 right now

After a tough few months, shares RCG Corporation Ltd (ASX:RCG) offer compelling risk-reward propositions.

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The Telstra Corporation Ltd (ASX: TLS) share price has been hammered over the past couple of months – but it's not the only share to have come under pressure.

In fact, quite a number of shares are now languishing at pretty attractive prices following some hefty share price falls.

If I had $10,000 to invest right now, here's how I would allocate the funds:

Mayne Pharma Group Ltd (ASX: MYX)

I would invest $3,500 in the generic drug maker following a 40% fall in its share price over the past 8 months. The market appears to have forgotten about the company's exciting growth prospects, and has instead decided to focus solely on an ongoing U.S. government probe into generic price collusion. Mayne Pharma currently has more than 40 pipeline products in the U.S. and is yet to extract all the synergies from its recent Teva generic portfolio acquisition. At just 13x earnings, I think Mayne Pharma offers a very attractive risk-reward proposition for risk tolerant investors.

RCG Corporation Ltd (ASX: RCG)

The RCG share price tumbled 9% on Monday as nervous investors continue to head to the exits. The shares are now trading at just 91 cents – a 53% discount from their 52-week highs. Much of the fall can be attributed to a small profit downgrade and changes to the management team at its recently acquired HypeDC business. There is little doubt the shares deserved to fall from their highs, but I think the sell-down has been excessive. I would be comfortable investing $2,500 in the footwear company considering the shares now offer a grossed up dividend yield of around 9.5%.

Healthscope Ltd (ASX: HSO)

The private hospital operator is facing some short term headwinds, but this doesn't change the longer term investment case. Along with the benefit of the ageing population, Healthscope will be adding hundreds of new beds and 49 new operating theatres to its portfolio over the next few years and this should help to deliver improved earnings over the medium and long term. Although I think the shares should trade at a significant discount to Ramsay Health Care Limited (ASX: RHC), I think the current discount of around 30% is a little too big and most of the negative news has now been priced in. As a result, I would allocate $4,000 towards Healthscope as a 'buy and hold' investment.

Motley Fool contributor Christopher Georges owns shares of Mayne Pharma Group Limited and RCG Limited. 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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