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Are These Fallen Angels Worth Buying At 52-Week Lows: G4S plc, Barclays PLC, Shire PLC And Burberry Group plc

Trying to seek out the market’s most undervalued and undiscovered value stocks can be tricky. However, the 52-week low ‘bargain bin’ never fails to throw up some interesting ideas.

So, here are just five former market darlings that have fallen from grace during the past few months and now trade at or near 52-week lows.

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China concerns 

Burberry (LSE: BRBY) has crashed to a 52-week low following concerns about the sustainability of the company’s Asian sales. The company warned back in October that due to an “increasingly challenging environment for luxury, particularly Chinese customers” retail sales growth for the year would slow to 2% from 8% reported for the first quarter.

However, even after recent declines Burberry’s shares still look expensive and don’t leave much room for error, so if the company warns on profits again, the shares could drop further. At present, Burberry’s shares are trading at an expensive looking forward P/E of 16.3, although the shares do support a dividend yield of 3%. 

Overpaying?

Shares in Shire (LSE: SHP) printed a new 52-week low this week as reports have started to circulate that the company is considering upping its bid for Baxalta, the US haematology drugmaker. Many investors are concerned that Shire could end up overpaying for Baxalta, especially as Roche, a rival group, recently received approval from the US regulator to allow the testing of a treatment that has the potential to devastate Baxalta’s sales.

Shire’s own shares are hardly cheap. They currently trade at a forward P/E of 18, despite the fact that analysts expect earnings per share to fall 33% this year before rebounding by 12% during 2016. Just like Burberry, it might be wise to stay away from Shire for the time being as there could be further declines to come. 

Not living up to expectations 

G4S’s (LSE: GFS) shares have dropped by 23% this year to a new 52-week and two-year low. Investors have raised many concerns about the state of the company, namely the ability for it to continue to grow internationally, and the state of the group’s balance sheet. In addition to these concerns, G4S’s shares continue to trade at a premium to the wider market. Indeed, the shares currently trade at a forward P/E of 15.8. 

That said, City analysts expect the company’s earnings per share to grow 14% this year. So when factoring in its projected growth rate, G4S’s shares don’t appear to be overly expensive at present levels. Still, the high valuation leaves little room for error if things don’t go to plan. 

No clear strategy

And lastly, 2015 has been yet another year of change for Barclays (LSE: BARC) The bank has re-jigged its restructuring strategy once again, has brought in yet another CEO and continued to sell down assets, but a return to growth has remained elusive. 

Barclays has been floundering for years and has shown time and again that it lacks a coherent strategy. Today the bank has announced that it’s planning to sell all, or part of, its African operations in an attempt to return to growth, although it’s unlikely that this move will be enough to reassure investors. Barclays trades at a forward P/E of 10.6 and the bank’s shares support a yield of 2.9%. 

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has recommended Barclays and Burberry. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.