Why these three stocks have lost a third of their value in a month

In the past month, Reject Shop Ltd (ASX: TRS), Atlas Iron Limited (ASX: AGO) and Cabcharge Australia Limited (ASX: CAB) have lost more than 33% of their value.

Could there be more falls ahead, or are these stocks in the bargain bin, just waiting to be picked up by opportunistic investors?

The Reject Shop appears to be struggling with several major issues, including trying to sell products its customers don’t want or need. That resulted in sales sinking, and the company’s announcement that it expects to report a full-year net profit of $12.5 million – including a second-half loss of $5 million. The company also cut its dividend to zero – no doubt disappointing many investors.

At this stage, investors might want to avoid Reject Shop until the company can show it’s making some progress.

Atlas Iron is suffering from the falling iron ore price – which has dropped from above US$94 a tonne in March to around US$66 a tonne currently. As a junior miner with higher production costs, Atlas suffers the most out of Australia’s iron ore miners as prices fall. The bad news is that analysts and market commentators are expecting prices to continue falling. That is likely to see Atlas’ share price continue to sink.

Cabcharge’s share price fall is not really bad news, after the company sold its 49% share in the ComfortDelGro joint venture for $184 million and issued shareholders with a special fully franked dividend of 80 cents per share.

Still, the company’s main business model appears challenged particularly with the rise of cheaper ride-sharing services like Uber.

Foolish takeaway

I’d give all three companies a miss for now and can’t ever see myself investing in the latter two, given their structural issues. Investors have many better opportunities like these below.

A Big, Fat, Fully Franked Dividend

This company's dividend is almost the stuff of legends. Since it started paying dividends in 2007, it has increased its payout to shareholders every single year, a run that includes 21 consecutive dividend increases.

Based on the last 12-months of dividends, its shares are currently offering a fully-franked 4.8% yield, which grosses up to almost 7% when those franking credits are included. And in stark contrast to the likes of Commonwealth Bank and Telstra, this company just increased its dividend by over 13%, and guided for 2017 profits to grow by 20%!

Discover the name of this "new breed" of blue chip along with 2 others in our new FREE report "The Motley Fool's Top 3 Blue Chips Stocks For 2017."

Click here to receive your copy.

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.