3 beaten-up shares that are too tempting to resist

In life and in investing, I like to look for the winners because my experience has been that they tend to keep winning.

That’s why I typically stay away from beaten down shares, but sometimes the price has fallen down so far that its tempting to have a second look.

Here are three beaten-up shares that look tempting at current prices:

Telstra Corporation Ltd (ASX: TLS)

The NBN roll out has left a $3 billion hole in Telstra’s EBITDA and so it’s no surprise that its shares have been cut in half over the last 3 years.

A PE ratio of 10 and a dividend yield of 9% (although this could be cut) make Telstra attractive on paper but the real potential lies in 5G wireless technology that could render the NBN obsolete.

Myob Group Ltd (ASX: MYO)

Myob shares are down 30% since August 2016 whilst shares in rival Xero Limited (ASX: XRO) are up 140% over the same period.

While Xero has much higher growth rates, Myob will also likely benefit from the same industry tailwinds that are supporting Xero. As more of Myob’s customers move their accounting software from the desktop applications to cloud based solutions, this will provide a recurring revenue stream.

Commonwealth Bank of Australia (ASX: CBA)

CBA shares are down almost 30% over the last 3 years, weighed down by concerns over non-compliance with regulations as well the housing market.

Despite that, CBA is still one of the most profitable banks in the world and with interest rates likely to go up over the medium to long term, this could increase the bank’s net interest margins.

Foolish takeaway

Whilst these companies’ shares look cheap, much of their success going forward depends on how well their management can  execute on their strategies. For that reason, I will wait on the sidelines until there are signs of improvement in the underlying business.

While the three shares above look tempting, they are not top of my watch list. Our team of experts have identified these 4 companies as the best shares to buy right now.

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Motley Fool contributor Kevin Gandiya has no position in any of the stocks mentioned.

You can find Kevin on Twitter @KevinGandiya.

The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of Xero. 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 Scott Phillips.

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