A lot happened on the ASX last week. The early part of last week saw the ASX heading swiftly downwards. By mid week the Australian index had commenced somewhat of a U-turn.
Here we are at the beginning of a new week and picking through the residual effects and prices at this morning’s open, there are plenty of bargains in the under $5 dollar share price range.
Reliance Corporation Worldwide Limited (ASX: RWC)
Reliance Corporation Worldwide designs, manufactures and provides water flow and control solutions, also known as specific plumbing supplies, to the residential, commercial and industrial markets globally.
At first glance, it’s been a poor year with the share price down 45% from the same time last year. Reliance contends that the lack of modest “freeze events” in the northern hemisphere, coupled with a decline in new home constructions in Australia, have placed some hurdles in the way of growth.
Those “freeze events” keep Reliance busy replacing cracked pipes. With the northern hemisphere winter only a few months away there’s every chance those unique products will be back in high demand.
Despite the hurdles mentioned above, Reliance outlined several positives in a recent announcement. There’s plenty of growth potential in both brass and plastic fittings technologies and the company remains a market leader across multiple product categories.
I’m optimistic about RWC with the share price currently sitting at $3.36 and a gross dividend yield at 3.12%. I’d have a very serious think about adding them to my portfolio as a long-term investment.
Nufarm Limited (ASX: NUF)
Nufarm is a global company that manufactures and distributes chemical products and specialist seeds to the agricultural industry.
Current investors will be disappointed in a 37% loss in share value over the past twelve months, which also includes the lowest share price since 2014. Since that low of $3.94 in May we have seen a rebound of almost 20% to be trading today at $4.64.
The share performance over the past twelve months can be attributed to ongoing drought conditions in large parts of Australia and supply issues to key parts of the European market. Despite this, the aggregated broker opinion at Marketwatch.com.au is that Nufarm is a “strong buy”.
This optimism could be driven by an anticipated strong demand for products in the upcoming Latin American season. Nufarm also states that “[o]ur Seed Technologies business has continued to see strong demand and we expect this to continue into FY20, with additional upside if weather conditions in Australia revert to more normal patterns.”
If you’re looking to buy cheaper shares, then I’d consider Reliance Corporation Worldwide and Nufarm as longer term investments. Coincidentally, both companies are reliant on favourable weather conditions and we should remind ourselves than no-one can control the weather. Take that on board as another piece of the puzzle as you make your own investment decisions.
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JWoodward has no position in any of the stocks mentioned. 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.