Wed all like to be able to pick bargain shares when they reach rock bottom, wouldnt we? Well, Ive been looking round shares that have been plunging to new lows of late, and wondering whats gone wrong and whether its time to buy.
I was surprised to see Aberdeen Asset Management (LSE: ADN) shares scraping two-year lows last week, having shed 34% from Aprils high of 510p to just 338p in so short a time. As I write, the shares are trading at 341p.
Part of the problem has been cautious investors withdrawing funds, with assets under management falling from 330.6bn at the end of March to 307.3bn at 30 June, due partly to a net outflow of 9.9bn in the quarter. But at the earlier halfway stage in March, underlying EPS had been up 13% and the company lifted its interim dividend by 11%.
The full-year dividend is forecast to grow by 8% to yield 5.6%, though there must surely be some who doubt that. But it would be covered around 1.6 times by forecast earnings, and theres plenty of free cash flow, so I reckon its likely to be safe enough and it makes Aberdeen Asset Management look like a bargain to me.
One Im less impressed by is Standard Chartered (LSE: STAN), whose shares crunched to a five-year low of 856p, after losing 29% in 12 months and 45% over the past two years. Standards Chartereds problems are manifold, with the internationally overstretched bank struggling in some territories (notably Korea) and its management team coming in for much criticism until we eventually got a new board in July.
The new broom is sweeping clean, and the first thing to go was the dividend that the bank simply could not afford the first-half cash has been slashed by 50%, and I wouldnt be surprised to see a further cut in the final payment.
On top of that, around 20% of Standard Chartereds loan book is tied in some way to plunging commodities prices. Thats already led to some write-offs, and there are likely to be more. Not one for me.
Then we come to an oily whose shares have lost two thirds of their value over the past 12 months, and its SOCO International (LSE: SIA), with a fall to 136p. I confess I find it hard to value oil companies, and Im torn over SOCO. On the one hand, a forward P/E of 12 based on forecasts for 2016 coupled with a relatively low dividend yield of 2.8% doesnt excite me, even if its not obviously overpriced.
But a net asset value per share of around 189p for shares at this price looks attractive (although it does depend on when those assets were last valued and at what prices). And SOCO is sitting on plenty of net cash, and is nicely profitable even with oil at around $50 a barrel.
SOCO will be a survivor, Im sure. But there could be more pain in the short term before things get better.
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended Aberdeen Asset Management. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.