Over the last 12 months the ASX 200 has underperformed expectations and fallen almost 6% excluding dividends.
While this is disappointing, spare a thought for shareholders of the three worst performing shares on the ASX 200 over the period.
Are these beaten down ASX 200 shares in the buy zone?
The Automotive Holdings Group Ltd (ASX: AHG) share price is down 61% since this time last year. This auto retailer's shares have come under significant selling pressure due to a challenging FY 2018 and a disappointing start to FY 2019. The company has faced headwinds across the automotive sector from the decline in the new vehicle market and the regulatory intervention in the sale of finance and insurance products. Unfortunately, with house prices continuing to fall, I don't expect things to get better for the company any time soon. So, while its shares do look cheap now, I would suggest investors hold off an investment until there's a notable improvement in its performance.
The Sigma Healthcare Ltd (ASX: SIG) share price has dropped 56% over the last 12 months. The main catalyst for this decline was the loss of its supply contract with My Chemist/Chemist Warehouse Group. This is expected to create a major gap in its earnings when it terminates in June 2019. For example, in FY 2019 the company has provided underlying EBIT guidance of $75 million, which itself is down 17% on last year's result. But things are expected to get even worse in FY 2020 with management forecasting underlying EBIT of between $40 million and $50 million. This will be a 33% to 47% decline on FY 2019's guidance. I think investors ought to stay clear of Sigma until its performance stabilises.
The Syrah Resources Ltd (ASX: SYR) share price may have jumped 8% higher today, but it is still down 56.5% over the last 12 months. As well as coming under pressure along with fellow battery ingredient shares such as Orocobre Limited (ASX: ORE), this graphite miner has fallen heavily due to a series of issues impacting production at its Balama project. The good news is that the company appears to have learned from these issues and looks operationally stronger now. I have Syrah on my watchlist for now and intend to wait for its half year results before considering an investment.
