The recent market volatility has thrown up some fantastic bargains for investors. So, without further ado, here are three companies trading at 52-week lows that I’m considering buying today.
Year-to-date, shares in medical products company Convatec (LSE: CTEC) have lost 21%. Investors have rushed for the exit following a series of worrying developments including a profit warning and immediate departure of its CEO a few weeks ago.
However, over the longer term, I believe this business should be able to rebuild its reputation because the demand for wound care products is only going to expand. Analysts are predicting sector growth of around 4% per annum.
These tailwinds should give Convatec room to stabilise itself in the years ahead. City analysts are expecting earnings per share (EPS) to come in at $0.16 for 2018, putting the shares on a forward PE of 12.9. In my view, this isn’t too demanding, especially for a defensive healthcare company.
Looking past Convatec’s short-term, self-inflicted issues, I think now could be a good time to snap up shares in the troubled medical group.
I’m optimistic about the outlook for security group G4S (LSE: GFS) for similar reasons. The company’s problems are mainly self-inflicted, and the broader global security market is expected to grow at a high single-digit annual rate for the foreseeable future.
As one of the largest private security firms in Europe, with a foothold in the United States and other regions around the world, G4S is well-placed to benefit from this growth.
Recently, shares in the firm have come under pressure after the UK government was forced to take control of Birmingham prison, which it has been running since 2011 on a 15-year contract. This is just a small part of the group’s global operation, but it seems investors are worried about the impact the development will have on the company’s reputation.
While it’s not ideal, I still think the shares are attractive, primarily because they are changing hands at a highly-discounted 10.6 times forward earnings, and support a dividend yield of 5%. After G4S sorts out its problems, I reckon the shares could re-rate to a higher multiple.
My last 52-week low pick is recruiter Hays (LSE: HAS). After adding around 15% during the first eight months of 2018, shares in Hays are now trading down 20% on the year after issuing a weak trading update at the beginning of October.
I think this could be an excellent opportunity for value-seeking investors. The sell-off has taken the shares down to a valuation of just 12.5 times forward earnings. Previously, the stock was trading at a forward P/E of nearly 20, which tells me that recent decline seems to be based on Hays’ premium valuation more than anything else. Indeed, City analysts are still expecting EPS growth of 11% for fiscal 2019. Further growth could be on the cards in the years after as well, as the global economy continues to expand.
Added to the attractive valuation, there’s a 4.5% dividend yield on offer, backed up by £80m of net cash on the balance sheet.
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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.