The Bravura Solutions Ltd (ASX: BVS) share price and the Xero Limited (ASX: XRO) share price may be racing to new highs today, but not all shares have had such a good run over the last few months.
Three shares that have been thoroughly beaten down and trade far closer to their 52-week lows than their 52-week highs are listed below.
Here's why I think this sell off could be a buying opportunity:
The Baby Bunting Group Ltd (ASX: BBN) share price is down over 35% from its 52-week high. The baby products retailer has come under pressure this year after becoming a victim of its own success. Many of the company's competitors have closed, leading to high levels of clearance activities. In order to hold its market share, the company has opted to compete on price at the expense of margin. While this is likely to lead to a decline in profits in the short term, in the medium term I expect strong profit growth as the company captures the vacated market share and increases prices again. Morgan Stanley appears to agree and gave it an overweight rating and $2.00 price target this morning.
The Commonwealth Bank of Australia (ASX: CBA) share price has tumbled 17% from its 52-week high amid concerns over internal practices and the impact of the Royal Commission. While the latter is of course ongoing, I remain confident that nothing material will emerge from proceedings. This could make it well worth considering Commonwealth Bank as an investment option today, especially given that its shares offer investors a trailing fully franked 5.9% dividend at present.
The Telstra Corporation Ltd (ASX: TLS) share price performance has been hugely disappointing over the last 12 months, shedding approximately 22% of its value. The cut to its dividend and concerns over its earnings gap and NBN margins have been the catalysts for this decline. I think this sell-off has been overdone and has left its shares trading at an attractive level. Especially if speculation that the Federal Government will write down the value of the NBN turns out to be accurate. According to Bevan Slattery, courtesy of Goldman Sachs, he estimates that a 50% write down would cut wholesale pricing to around $35 per subscriber versus the current estimate of $52 per subscriber.
