Although the Australian share market charged higher on Monday, not all shares managed to post gains.
In fact, some popular shares even sank to 52-week lows or worse yesterday. Does this make them bargain buys?
The Bellamy's Australia Ltd (ASX: BAL) share price dropped to a 52-week low of $7.07 yesterday. Investors have been hitting the sell button in a hurry since the infant formula company revealed that Australian label sales were expected to be down by upwards of 15% in the first half and flat for the full year. While the company is likely to be given a big boost when it is finally allowed to sell Chinese label products, it is unclear when its application will be approved. Because of this, Bellamy's full year result is likely to be a big disappointment compared to original expectations. However, I believe the long-term potential that Bellamy's has makes it worth considering it as a buy and hold investment.
The Kogan.com Ltd (ASX: KGN) share price plunged as much as 36% lower to a 52-week low of $2.97 on Monday following the release of a very disappointing business update. That update revealed a poor start to the year due to a surprising 27.4% decline in Global Brands revenue. Management blamed changes in the GST law effective from July 2018 and "the now apparent avoidance of GST by a number of foreign websites selling into Australia." Considering the high levels of insider selling post-earnings and the unusual absence of a trading update with its full year results, I'm not surprised to see its share price collapse this week. While its shares do look to be good value now, I would suggest investors wait for more colour at its AGM next month or its half year results early next year.
The Nick Scali Limited (ASX: NCK) share price continued its slide on Monday and fell to a 52-week low of $5.20. Last week the furniture retailer's managing director Anthony Scali warned that same store sales growth would be challenging in a volatile trading environment due to a slow-down in residential sales, which is a key driver of furniture sales. In addition to this, softening consumer sentiment and a weak Australian dollar are expected to weigh on its performance in FY 2019. Although I am a fan of the company, I think it is best avoided at this point in the cycle.
