ASX Midday Hot Stocks: United Group, Monadelphous and Downer EDI

ASX slides as fears of a commodity price crash rise

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published May 15, 2013 12:16 pm AEST

The S&P / ASX 200 Index (Index: ^AXJO) (ASX: XJO) has slumped, and is currently down 0.9%, at 5,175.1 dragged down by heavy losses in the metals and mining, materials and gold sectors, and big falls in mining services companies.

Here's why these three stocks are hot right now.

United Group (ASX: UGL) shares are down 15% to $8.14, after the engineering and mining contractor slashed its full year profit guidance. The company blamed a slowdown in mining investment as miners wind back their capital expenditure, resulting in net profit forecast to come in between $90-$100 million, compared to its previous guidance of $150-$180 million.

Monadelphous Group (ASX: MND) has lost 9.6% to trade at $17.97, following recent disappointing trading updates from other mining services companies. Overall, the trend appears that projects across mining, infrastructure and even oil & gas are either being delayed or cancelled. While mining investment is forecast to end this year or next, actions by the big miners suggest capital expenditure may already have peaked.

Downer EDI Limited (ASX: DOW) fell 9.7% to $4.18. Like Monadelphous and United Group, Downer has a heavy exposure to the resources industry, providing contract mining, blasting and drilling and construction services amongst others. While many services companies had assumed that contracts and revenues have been locked in, we've seen that that's not the case, and contracts are being cancelled or postponed.

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