The Motley Fool

Should you buy these beaten down ASX shares?

On Wednesday the Australian share market may have rebounded higher, but the same cannot be said for the shares listed below.

During yesterday’s trade they fell to 52-week lows or worse. Are these beaten down shares in the buy zone now?

The Estia Health Ltd (ASX: EHE) share price fell to a 52-week low of $2.30 on Wednesday. Shareholders have continued to head to the exits in their droves since the government announced plans for a Royal Commission into the aged care sector. Considering the damage the financial services inquiry has done to the banks and companies such as AMP Limited (ASX: AMP) and Freedom Insurance Group Ltd (ASX: FIG), I can’t say I’m surprised by the selling. While this may one day prove to be a buying opportunity, I think investors should stay well clear of Estia Health and its peers.

The GBST Holdings Limited (ASX: GBT) share price touched on a 52-week low of $1.72 yesterday. The shares of this specialist financial technology company have come under significant pressure since the release of a disappointing full year result. GBST posted flat revenue of $88.3 million and a 22% decline in adjusted net profit after tax to $8.2 million. The loss of a major client by two of its key segments was the reason behind the poor performance. Unfortunately, investors don’t appear to be expecting an improvement in FY 2019. I would suggest investors hold off an investment until the company has provided a trading update for the current financial year.

The Westpac Banking Corp (ASX: WBC) share price fell to a multi-year low of $27.07 on Wednesday. Shareholders have been selling the bank’s shares in a hurry after it downgraded its profit expectations last month. Westpac advised that its full year profit result would be reduced by $235 million following further work on addressing customer issues and from provisions related to recent litigation. While this news is disappointing, I still see a lot of value in its shares at this level and think it is worth considering if you don’t have exposure to the banks already.

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has recommended GBST Holdings Limited. 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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