The Motley Fool

Why Costa and these ASX shares have been smashed in 2019

Although the Australian share market has recorded a very strong gain in 2019, not all shares have managed to climb higher with it.

The three shares listed below, for example, have missed out on these gains and crashed notably lower. Here’s why they have been smashed in 2019:

The Costa Group Holdings Ltd (ASX: CGC) share price has sunk 53% lower since the start of the year. The catalyst for this decline has been a series of earnings guidance downgrades by the horticulture company due to weak prices and challenging trading conditions. Unfortunately, there are concerns that weak fruit and vegetable prices could mean that Costa falls short of its calendar year guidance as well. In light of this, although I think Costa could be a good long term investment, I suspect that its shares could still sink even lower if it misses its guidance again. For this reason, I would hold off an investment for now.

The Platinum Asset Management Ltd (ASX: PTM) share price has fallen almost 18% since the start of the year. The asset manager’s shares have come under pressure this year due to the poor performance of its funds. This led to Platinum reporting performance fees of just $30,000 in FY 2019, compared to almost $22 million a year earlier. In addition to this, at the end of the period, Platinum reported funds under management of approximately $24.8 billion, down 4% from the same period last year. Investors appear concerned that its funds’ underperformance and the growing popularity of ETFs could weigh on its results again this year. I agree with these concerns and would suggest investors stay clear of its shares for the time being.

The St Barbara Ltd (ASX: SBM) share price is down 39% in 2019. Although the gold price has surged higher this year, investors have been selling this gold producer’s shares due to issues at its Gwalia mine. These issues led to the company downgrading its production guidance materially, which ultimately resulted in a sharp decline in profits and an increase in costs in FY 2019. St Barbara achieved an underlying net profit after tax of $142 million, down 30% from $202 million a year earlier. Whilst FY 2019 was very disappointing, I’m optimistic that things will improve in 2020. So with its valuation looking attractive after this decline, I think it could be a good option for investors looking to gain exposure to gold.

Instead of Platinum, I would buy these cheap shares that could be bargain buys at today's prices.

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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 COSTA GRP FPO. 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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Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

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