With the FTSE 100 sliding further its down another 30 points to 6,388 as I write there must surely be some bargains to be had, mustnt there?
After all, when markets are bearish towards stocks, the good get sold off with the bad, and it can be a good time remember Warren Buffetts advice to Be greedy when others are fearful. So lets have a look at three companies whose shares have recently fallen to 52-week lows:
Rolls-Royce
Its not been a good 12 months for Rolls-Royce Holdings (LSE: RR) (NASDAQOTH: RYCEY.US), whose shares slipped to a low of 786p on 23 October, for a loss of 32% over the past 12 months.
The latest drop was triggered by a profit warning on 17 October, which told that a deterioration of conditions and tightening Russian trade sanctions are likely to lead to a full-year fall in revenue of 3.5% to 4% previous guidance had suggested revenue would be flat. Underlying profit should now be flat, excluding around 60m in exchange rate losses and a one-off 30m from the firms Marine division.
Tate & Lyle
The low for Tate & Lyle (LSE: TATE) of 571.5p came on 17 October, and at the time of writing its back up 10p to 581.5p.
The shares are down 26% over 12 months, after a couple of precipitous falls following profit warnings. The latest, on 23 September, told us that prolonged and severe winter in the US had been more damaging than expected, and the company faces additional non-recurring costs of 20m in its second quarter thats 40m for the year so far.
Chief executive Javed Ahmed described the half as extremely disappointing, and its impossible to disagree.
Kier Group
Construction firm Kier Group (LSE: KIE) hits its low of 1,457p on 16 October, and its actually recovered to 1,528p today. Its the smallest of our three 12-months falls, of a relatively modest 14%.
Full-year results released in September were pretty reasonable, with revenue up 51% and underlying pre-tax profit up 54%, but there seems to be a general bearish mood afflicting the sector right now.
Which is best?
Kier Group looks unfairly punished to me right now, but its not my favourite of the three.
Flat earnings would see Rolls-Royce shares on a forward P/E of about 12.5, with a dividend yield of a bit under 3% forecast. That looks low to me, and the bulk of Buy recommendations out there agrees Rolls-Royce is my pick of these three.
A well-balanced portfolio chosen from a number of sectors really is the best way to build yourself a healthy retirement pot, but should Rolls-Royce be one at today’s prices?
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended Tate & Lyle. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
