15 Shares Near 52-Week Lows
LONDON -- Although the market has rallied recently, some shares are still struggling. This includes small caps through to FTSE 100 blue chips. Sometimes share prices fall for good reasons, but often the market gets it wrong. Knowing the difference is what separates good investors from the bad.
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I've trawled the market to find shares trading close to their 52-week lows. Here are the largest companies I could find that are trading at beaten-up valuations:
Market Cap (millions of pounds)
How Far From 52-Week Low
Wm. Morrison Supermarkets
Eurasian Natural Resources
EVRAZ (ISE: EVR.L)
Ashmore (ISE: ASHM.L)
ICAP (ISE: IAP.L)
KSK Power Ventur
Carphone Warehouse (ISE: CPW.L)
Four of these looked particularly interesting.
Shares in interdealer broker ICAP have been hit by the LIBOR scandal. While ICAP does not participate in setting LIBOR, two members of ICAP staff were suspended by the company as a result of ICAP's own investigation.
The company's recent trading statement confirmed that management expects pretax profits for the full year to come in at around 350 million pounds, versus the prior year's 354 million pounds. ICAP hopes to achieve substantial cost reductions (more than 50 million pounds) this year. While it is good that shareholders' money is being saved, it is concerning that cuts are required if profit is to stand still.
The company has increased its dividend to shareholders year on year for the last six years. The payout has advanced, on average, 12.3% per annum. This puts the shares on a prospective yield of 7.4%. ICAP's price-to-earnings ratio against 2013 forecasts is just 7.9.
The financial sector could rally significantly if eurozone concerns are dealt with. ICAP looks like a unique opportunity to gather a huge dividend in the meantime.
2. Carphone Warehouse
Given the British public's apparent inability to walk or drive without using their mobile phones, you may be surprised to see shares in retailer Carphone Warehouse languishing.
In fact, the shares are down almost 70% over the last 12 months. In Carphone Warehouse's case, however, this is not a sign of weakness. In April the company returned 813 million pounds to shareholders following the sale of its share in Best Buy Mobile.
This leaves Carphone Warehouse shares trading on just 10.5 times consensus EPS forecasts for 2013. The dividend is expected to be maintained for a yield of 4%. As such, it is one of the most highly rated high-street retailers. Compared with the rest of its sector, Carphone Warehouse only looks attractive on a dividend basis.
Ashmore is one of those big companies you've probably never heard of. Ashmore came to the market in 2006. The company is an investment manager focused on emerging markets. Today, it manages over $63 billion pounds of assets.
Revenue at the company more than doubled between 2006 and 2011. In that time, EPS at the company increased from 10.1 pence to 26.6 pence, increasing in every year but 2009. Somewhat disappointingly, the company dividend did not keep up with profits, rising from 8.3 pence to just 14.5 pence in those years.
Like most fund managers, Ashmore does well when the markets in which it invests do likewise. If investments rise in value, Ashmore's revenues benefit doubly: Assets under management rise, and more investors are attracted. Obviously, the converse is also true: Losses in emerging markets would damage Ashmore's business and its share price.
Despite its growth in recent years, Ashmore appears to be trading at a discount to peers such as Schroder's. That seems hard to justify, unless you think emerging markets will underperform in future.
EVRAZ has the kind of share price graph I can only describe as sobering. Since reaching 460 pence at the end of January, the shares have fallen in each subsequent month. The experience of EVRAZ shareholders this year should remind us all that the wrong equity investments can be bad for your wealth.
EVRAZ is a natural-resources company with the largest part of its operations in Russia. One of the largest producers of steel in the world, EVRAZ is the only way to get real exposure to steel in the FTSE 100.
While the company's share price has disappointed recently, it is not the only miner in the doldrums. The forecast earnings and dividend mean the company has some value characteristics. With this sector, however, the market will often price in a political discount. This means EVRAZ may have less upside than some peers that are operating elsewhere.
If you are drawn to shares that are out of favour, then you might be a contrarian investor. Some of the very best investors are contrarians, such as top U.K. fund manager Neil Woodford. A big part of his outperformance was his refusal to follow the crowd into dot-coms during the late '90s tech bubble. The result? A massive 347% outperformance.
Today you can learn how Neil Woodford does it in our free report: "8 Shares Held By Britain's Super-Investor." The report will be delivered free to your inbox.
Further investment opportunities:
The article 15 Shares Near 52-Week Lows originally appeared on Fool.com.David does not own shares in any of the above companies. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.
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