Motley Fool Australia

Should you buy Telstra and these beaten down ASX shares?

Beaten down ASX shares

The Australian share market has been out of form for the last few days and has pulled back from recent highs.

While this is a touch disappointing, spare a thought for shareholders of the three ASX shares listed below.

These shares have just fallen to 52-week lows or worse. Is this a buying opportunity?

Insurance Australia Group Ltd (ASX: IAG)

The Insurance Australia share price dropped to a multi-year low of $4.68 on Tuesday. The insurance giant’s shares have been sold off in recent months due to the impact of the pandemic on its business. For the 12 months ended 30 June 2020, IAG reported a 5.2% increase in revenue to $18,576 million but a 49.6% decline in net profit from continuing operations to $439 million. Management advised that a material narrowing in its insurance margins was responsible for the profit slump. In light of this poor form, no final dividend will be paid to shareholders. I’m not convinced that the worst is over for the company, so won’t be in a rush to invest.

Orora Ltd (ASX: ORA)

The Orora share price was out of form and dropped to a multi-year low of $2.20 yesterday. Investors have been selling the packaging company’s shares following a poor FY 2020 result and its weak outlook. In FY 2020 the company posted a 22.8% decline in net profit after tax to $127.7 million. Looking ahead, management warned that it expects challenging and uncertain market conditions to persist for the foreseeable future. In light of this, I would stay clear of Orora until conditions improve.

Telstra Corporation Ltd (ASX: TLS)

The Telstra share price tumbled to a 52-week low of $2.83 on Tuesday. Investors have been selling the telco giant’s shares amid concerns that it won’t be able to sustain its 16 cents per share dividend in FY 2021. This follows the release of its guidance in August which revealed a greater than expected impact from the pandemic. I’m optimistic a change in dividend policy will allow for this dividend to be maintained. As a result, I think the Telstra share price weakness is a buying opportunity.

These 3 stocks could be the next big movers in 2021

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

*Returns as of 15/2/2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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.

Related Articles…

Latest posts by James Mickleboro (see all)