The following four companies have all plunged over the last few months to near their 52-week lows, but does this mean that all of them represent a bargain?
Next
Analysts are predicting a tough year for the high street as consumers are squeezed, inflation rises, and the weak pound forces up the cost of imported raw materials. Clothing and homewares retailer Next (LSE: NXT) suffered an unhappy Christmas, and management has been warning of worse to come. It currently trades at 3,550p, down from its 52-week high of 6,775p.
With inflation forecast to hit 3% and Brexit uncertainty growing, it is hard to see Next picking up in the short run. However, trading at 8.6 times earnings, there is scope for upside unless Article 50 sparks chaos. Yielding 4.14%, it looks a good long-term buy. Top fund manager Neil Woodford certainly thinks so.
Capita
Shares in outsourcing specialist Capita Group (LSE: CPI) hit a 10-year low last year in the wake of a profit warning. Today it trades at 528p, roughly half its year high of 1,101p. One of the worst performers on the FTSE 100, it has been hit by a storm of Doris-like proportions, with parts of the business slowing, one-off costs surging and clients hesitating, problems only worsened by high financial gearing, falling sales and weak growth.
Yet there are signs of a comeback, with the stock up 6.71% in the last week. Despite that is still trades at just 7.75 times earnings, and yields a juicy 5.75%. The recovery may take time, but if you are patient, now could be a tempting time to take a position.
Dixons Carphone
The misery continues at Dixons Carphone (LSE: DC), with its share price down more than 7% in the last month. Today’s price of 298p is well below its 52-week high of 461p. The electronics retail group was hit hard by Brexit, and unlike many top companies has failed to bounce back, despite recently posting its fifth consecutive year of Christmas sales growth.
The group, which includes the Currys, PC World and Carphone Warehouse brands, has done well to survive the shift to online shopping, and looks tempting at 10.15 times earnings, yielding 3.27%. Earnings per share growth also looks steady, in a range from 4% to 7% over the next few years. Sentiment remains negative however, as consumer confidence looks fragile.
Mediclinic
Mediclinic International (LSE: MDC) has plunged 27% in the last six months to trade at today’s price of 737p, well below its 52-week high of 1,125p. The private healthcare group was formed last year when Abu Dhabi-based FTSE 250 firm Al Noor Hospitals combined with South African company Mediclinic, and promoted to the FTSE 100, had a tough debut year.
It continues to struggle, falling nearly 8% in the last week, after reporting “challenging” conditions for its Abu Dhabi business, where earnings and revenues are falling. This overshadowed the good news of its Swiss and Southern Africa businesses trading in line with expectations. Mediclinic nevertheless trades at a heady 20 times earnings and yields a lowly 0.71%. Of the four, I would suggest giving this one a miss.
