In January the All Ordinaries index continued its stellar run and recorded a gain of over 4.5%.
Not all shares were on form last month, though. The three All Ords shares listed below were sold off in January. Is this a buying opportunity?
Bubs Australia Ltd (ASX: BUB)
The Bubs share price sank 17.3% lower in January. The majority of this decline came on the final day of the month following the release of the infant formula and baby food company’s second quarter update. Although its sales grew by 21% on the prior corresponding period to a record $14.54 million, a sudden decline in its China sales appears to have spooked investors. Sales in China sell 32% during the second quarter. Whilst I believe Bubs has a lot of promise, I think it may be some time before it reaches profitability. In light of this, I’m holding off an investment for the time being.
Kogan.com Ltd (ASX: KGN)
The Kogan share price crashed 32% lower in January. Investors were selling Kogan’s shares after it released a surprisingly disappointing first half update. Kogan reported gross sales and gross profit growth of 16% and 9%, respectively, over the prior corresponding period. This was a material slowdown on its gross profit growth during the first quarter when it posted a 28% increase over the prior corresponding period. This appears to have been driven by a sudden and material decline in Third-Party Brands sales. Whilst its performance in the first half was very disappointing given its strong start, I feel confident that its long term growth trajectory is still in place. This could mean it is worth considering a patient buy and hold investment in its shares.
Mosaic Brands Ltd (ASX: MOZ)
The Mosaic Brands share price dropped 23% lower in January. The catalyst for this decline was a trading update released in the middle of the month. The fashion retailer, formerly known as Noni B, revealed that comparable sales through the second half of November and throughout December were negatively impacted by the devastating bushfires. As a result, first half reported EBITDA is expected to be up 36% to ~$32 million. Although this looks like strong growth in a challenging retail market, it has fallen well short of expectations following some significant acquisitions. When the dust settles I think it could be worth taking a look at Mosaic Brands. But for now, I feel it could be a touch too soon to make a move.
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BUBS AUST FPO and Kogan.com ltd. 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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