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Should you buy the beaten down shares of Challenger and 2 other All Ords shares?

Although the Australian share market has had a positive start to the year, not all shares have been able to follow it higher.

In fact, the three shares listed below have not only underperformed the market, they have sunk to 52-week lows or worse this week. Here’s why:

The Challenger Ltd (ASX: CGF) share price crashed 18% lower to a multi-year low of $7.58 on Wednesday. Investors hit the sell button in a hurry after the annuities company downgraded its full year profit guidance following a tough first half of FY 2019 due to increased market volatility and declines in performance fees. Management now expects to report a full year normalised net profit before tax of $545 million to $565 million in FY 2019. This will be at worst a decline of 0.5% and at best an increase of 3.2% on last year’s result. Previous guidance was for annual growth of between 8% and 12%. While its shares look decent value now, I’m going to hold off an investment until its performance improves.

The National Veterinary Care Ltd (ASX: NVL) share price continued its poor run and dropped to a 52-week low of $1.63 yesterday. This means the veterinary care provider’s shares have lost almost half of their value over the last 12 months. Investors have been heading to the exits due to concerns over challenging conditions in the veterinary market. At its AGM, rival Greencross Limited (ASX: GXL) advised that like for like sales of its standalone vet clinic had fallen 1.8% during the first 17 weeks of FY 2019. Although I am a fan of National Veterinary Care, I’m staying clear of its shares until trading conditions improve.

The Paragon Care Ltd (ASX: PGC) share price fell to a 52-week low of 58 cents on Wednesday. The shares of the integrated services provider to health and aged care markets have come under pressure over the last couple of months after providing an underwhelming AGM update. That update showed that the company was falling short of expectations for both growth and costs during the first four months of FY 2019. This decline has left its shares trading at a lowly 11x trailing earnings, which I think is attractive. Though it may be best to wait for its half year results next month before making a move.

In the meantime I would sooner buy these buy-rated growth shares tipped as potential market beaters.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia owns shares of NATVETCARE FPO. The Motley Fool Australia has recommended Greencross Limited and Paragon Care 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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