The S&P/ASX 200 index may have been trading at a multi-year high again on Wednesday, but not all shares on the benchmark index are making new highs.
In fact, some constituents of the index are trading significantly lower than where they were this time last year. Could this be a buying opportunity for investors?
The Bellamy’s Australia Ltd (ASX: BAL) share price has lost 51% of its value over the last 12 months. The catalyst for this decline has been the lengthy delay the company has faced in gaining SAMR accreditation for its organic infant formula. By not being able to sell its key product on the China mainland after regulation changes last year, Bellamy’s has lost a major revenue source that the daigou channel hasn’t been able to fully offset. Whilst it remains uncertain if and when Bellamy’s will be granted its accreditation, I’m optimistic that it will come in the near term. When it does, it is likely to lead to a significant jump in sales and position the company for a period of strong earnings growth.
The Bingo Industries Ltd (ASX: BIN) share price has tumbled 27% lower since this time last year. This has been caused by the company’s surprise underperformance in FY 2019 due to the faster than expected softening in multi-dwelling residential construction activity across its key markets. Whilst this headwind may not be going away in the near term, it won’t have an as meaningful impact on the company’s overall results in the future following the completion of its Dial a Dump Industries acquisition. This has diversified its business significantly and provided it with significant growth opportunities. In light of this, I think Bingo would be a good option for patient investors.
The Costa Group Holdings Ltd (ASX: CGC) share price has been the worst performer of the three over the last 12 months with a decline of 53%. This is due to a series of guidance downgrades which sent many shareholders to the exits in their droves. Whilst this is very disappointing, I believe the selloff has been overdone and has left its shares trading at an attractive level even for its revised guidance. As a result, I feel its shares now offer a compelling risk/reward for investors.
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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. The Motley Fool Australia has recommended Bellamy’s Australia. 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.
The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019