If you want to see three shares that have been pummelled by a combination of the Chinese slowdown and the FTSE slump, look no further than Glencore (LSE: GLEN) whose shares had crashed by 69% over 12 months up until the market close yesterday, Ferrexpo (LSE: FXPO) which was sitting on a 75% fall, and KAZ Minerals (LSE: KAZ) withits 61% slump.
But today, all three are amongst the FTSEs top ten risers. So are they finally on the turn and is it time to buy?
Just a week ago, investors were buoyed by Glencores equity issue and debt-reduction plans, and on the day the placing results were announced the share price perked up 5% to 135p. Since then the general sell-off has plunged them down as far as 106p on Tuesday, but Wednesdays rebound added 5% back again.
Attractive dividends
With the price now back up around 110p, forecasts for 2016 put Glencore shares on a forward P/E of under nine, and though forecasts will need to be updated, we must surely be around the bottom, mustnt we? The crash has upped Gleencores potential dividend yield to around 9.5%. That wouldnt be covered by earnings, but the dividend cash could be slashed by 50% (leaving adequate cover) yet still provide one of the better yields in the market.
Ferrexpo has had a harder time than most. As if being an iron ore producer wasnt bad enough in todays environment, last week we had the news that Bank Finance and Credit in Ukraine, which is ultimately controlled by Ferrexpos largest shareholder and holds a chunk of Ferrexpos cash, had gone bust and Ferrexpos shares lost a massive 46% in the days following the announcement.
At the time of writing theyre back up 8% to 35p, but a recovery is very much open to debate now. Even before the bank crisis, Ferrexpo shares were down 53% over a year, and the firms debt situation looks a bit worrying at the first half stage, net debt stood at 1.9 times the last 12 months EBITDA, up 58% from a year previously.
The best of the three?
My third possible turnaround for today is KAZ Minerals, whose shares were up more than 8% at one stage today, to 113p. That comes on the back of a big slump in recent days, and for my money KAZ is looking oversold due to over-reaction to falling Chinese demand for copper and other metals.
KAZ is set for a loss this year, but 2016 should see a return to modest profit. P/E valuations at the turnaround stage dont mean much, but KAZ shares are trading on a Price to Book Value ratio of only around 0.4 and thats very low for the sector. I can see KAZ doing well over the next few shares.
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.