The benchmark S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) had a soft start to the week on Monday and slipped 0.1% lower to 6,186.9 points.
While this was disappointing, spare a thought for the shareholders of the companies listed below which fell to 52-week lows or worse on Monday. Is this a buying opportunity?
The Lynas Corporation Ltd (ASX: LYC) share price tumbled to a 52-week low of $1.60 yesterday after Malaysian media reported that the local government was launching a review of the rare earth miner’s operations in the country. Worst of all, though, is the fact that the Malaysian media has suggested that the chair of the proposed committee may be a long time anti-Lynas campaigner. If the Lynas Advanced Materials plant in Gebeng were to be closed it would be a major blow to the company. While I’m optimistic that this won’t happen, I would suggest investors stay clear of the company until the potential three-month review is complete.
The Regis Healthcare Ltd (ASX: REG) share price fell to an all-time low of $2.87 on Monday. Shareholders have continued to offload shares following the announcement of a Royal Commission into the aged care industry. While Regis’ shares do look cheap now at 14x earnings, I’m concerned that the Commission could have an extremely negative impact on the industry and lead to a sizeable drop in profits. Because of this, I feel there is a danger that Regis and the rest of the aged care providers could turn out to be value traps.
The Sims Metal Management Ltd (ASX: SGM) share price dropped to a 52-week low of $11.70 yesterday after the global metals and electronics recycling company provided a disappointing first quarter trading update. Sims’ management warned that due to weakness in its SA Recycling business, it expects the company to achieve underlying earnings before interest and tax between $58 million and $63 million for the first quarter of FY 2019. While this will be an improvement on the prior corresponding period, it will be a decline on the previous quarter. Reasonably strong growth had been expected this year by the market, but that is looking unlikely now. But with its shares now trading at 11.5x earnings, when the dust settles I think Sims could be worth a closer look.
In the meantime, I would consider this buy-rated share which has been tipped for big things in FY 2019.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 Scott Phillips.