This week’s crop of stocks trading in the 52-week low “bargain bin” includes Countrywide (LSE: CWD), Thomas Cook (LSE: TCG), Vislink (LSE: VLK), Daily Mail and General Trust (LSE: DMGT) and UK Mail (LSE: UKM). All of these companies have seen their share prices plunge to new 52-week lows this week. The question is, are these companies bargains ready to be snapped up, or falling knives that should be avoided?
At first glance, it looks as if Countrywide is a company in turmoil. Three of the company’s top executives walked out this month, the latest in a long line of departures as a result of the dramatic reshaping of the group under chief executive Alison Platt. All three senior management figures walked out to pursue “other opportunities”, which was the same excuse given earlier in the year when the managing director of estate agency group, Bob Scarff, and the group commercial director, Nick Dunning, both stepped aside at short notice. It looks as if these departures are part of the group’s drastic restructuring. However, while management is busy reorganising the business, Countrywide’s profits are falling. Earlier this month Countrywide revealed operating profits for the first nine months of the year were down 11% year-on-year. City analysts expect full-year earnings per share to fall 13% year-on-year so for the time being it might be wise to avoid the company.
Thomas Cook fell to a 52-week low on concerns that geopolitics would weigh on the company’s earnings for the next few years. But the company dispelled these concerns this week by reporting full-year results that beat expectations. Net profit nearly doubled in the year to the end of September and based on these figures the company currently trades at a P/E of 9.1. After an impressive 2015, Thomas Cook could have more in the tank for 2016.
Stagnant sales and concerning levels of management compensation have weighed on Vislink’s share price this year. Vislink’s shares are down by nearly 50% from their June peak and they now trade at a forward P/E of 7.5. City analysts expect the company to report earnings growth of 18% for 2015, implying that the group is trading at a 2016 P/E of 6.9. As With such a low valuation, Vislink’s shares could be worth a bet.
Daily Mail and General Trust has been hurt by lower-than-expected visitor numbers to the company’s MailOnline newspaper. Group pre-tax profit fell 4%for the year ended 30 September 2015, but City analysts expect the company to return to growth next year. Earnings per share growth of 4% in pencilled in for next year. Daily Mail and General trades at a forward P/E of 11.8, which isn’t overly expensive and the shares support a yield of 3.2%. Still, if the company disappoints again, the shares could print a new 52-week low.
City analysts expect UK Mail’s earnings per share to slump 50% to 15p for the year ending 31/03/2016 and based on this forecast the company is trading at a forward P/E of 21.6, a premium growth multiple the company doesn’t deserve. What’s more, UK Mail’s shares may support a dividend yield of 7.2% by the payout isn’t covered by earnings per share. Overall, UK Mail might be one company to avoid.
