The Motley Fool

Why Galaxy Resources and these ASX shares crashed to 52-week lows

The All Ordinaries index tumbled lower on Monday after escalating trade war concerns rattled global markets. Whilst the majority of index constituents dropped lower, some fell more than most and hit 52-week lows or worse.

Three that made this unwanted milestone are listed below. Is this a buying opportunity?

The Bega Cheese Ltd (ASX: BGA) share price dropped to a multi-year low of $3.90 on Monday. Investors have been selling the diversified food company’s shares since it downgraded its earnings guidance for FY 2019 last week. Bega Cheese downgraded its guidance for normalised EBITDA to be in the range of $113 million to $117 million. This compares to previous guidance of $123 million to $130 million and was driven by higher costs and its record milk intake. Whilst its shares look good value now, I would wait for trading conditions to improve before investing.

The Galaxy Resources Limited (ASX: GXY) share price continued its slide and tumbled to a multi-year low of $1.20 yesterday. Galaxy and the rest of Australia’s lithium miners have fallen heavily over the last 12 months due to a collapse in prices of the battery making ingredient. This has been caused by increasing supply and subdued demand in China. Unfortunately for Galaxy and its peers, experts are tipping prices to go even lower before eventually going higher again. As a result, I would continue to wait for signs that lithium prices have hit an inflection point before considering an investment.

The Reliance Worldwide Corporation Ltd (ASX: RWC) share price fell to a 52-week low of $3.36 on Monday. Investors have been selling the plumbing parts company’s shares this year after it surprised the market with a downgrade to its earnings guidance caused by weaker than expected sales across the majority of its businesses. One reason for the weaker sales was the lack of a modest freeze event in the United States during the winter. This usually results in pipes breaking and an uptick in sales of its push-to-connect plumbing fittings. Whilst its shares could yet go lower, I see a lot of value in them at this level for patient investors.

As well as Reliance Worldwide, I think these dirt cheap shares could be bargain buys.

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James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Reliance Worldwide Limited. The Motley Fool Australia has recommended Reliance Worldwide 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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