Lucky investors are looking at a discounting bonanza this week, with retail gems Super Retail Group Ltd (ASX: SUL) and FlexiGroup Limited (ASX: FXL) hitting 52-week lows. Joining them are junior airline Alliance Aviation Services Ltd (ASX: AQZ), junior iron miner Atlas Iron Limited (ASX:AGO) and stem-cell developer Mesoblast Limited (ASX: MSB).
Flexigroup and Super Retail Group – last traded at $3.30 and $8.62.
These two look to be at the mercy of market reactions to an austere budget and low consumer confidence – consumer discretionary stocks usually take a dive under these conditions. Their fall from grace reminds me of a paraphrased Warren Buffett quote; 'in the short term the market is a voting machine, in the long term it is a weighing machine'. In other words, in the short term the price reacts to news and sentiment, while in the long term only results drive performance. It's true, and with no changes to their fundamentals, a low price makes both these stocks even more appealing.
Alliance Aviation Services – last traded at $1.075
There's a reason Alliance is one of my 3 favourite stocks to deliver standout returns in 2015. And that's despite – or rather, as a result of – an NPAT decrease of 40% to $12 million (and a price drop of 40% too) this year. What sellers don't realise though is that due to some big contract wins, Alliance's profit will jump by 50% again to $18 million in FY2015. In the absence of bad news I think that buyers now could expect dividends of 8-10% (at today's prices) next year and substantial capital growth.
Atlas Iron – last traded at $0.67
Although it's lost roughly 50% since reaching its peaks in December, Atlas Iron is down only 10c since the start of this 52-week period. A quick glance at an iron ore price chart will tell you everything you need to know about the decline, and there may be further to fall yet. Despite unattractive iron prices, Atlas is one of the best low-cost junior miners on the ASX – alongside BC Iron Limited (ASX:BCI) – and would make a good purchase at the right price.
Mesoblast Limited – last traded at $4.53
Despite having $250 million in cash and accelerating its plans to begin commercial manufacturing in Singapore, Mesoblast is at its lowest point in 52 weeks. The company believes that overall falls in the NASDAQ biotechnology index may be to blame, with the index down 11% in six months while Mesoblast has fallen 23%. Again it appears to be a case of voting versus weighing, as Mesoblast moves ever closer to commercialisation. Actually at its lowest price since the end of 2010, Mesoblast could be a great purchase for the right investor.
Trading at 52-week lows, each of these companies represents considerable value. Alliance Aviation is more suitable for the short-term investor, and I would be cagey around Atlas Iron until macroeconomic conditions improve, but FlexiGroup, Super Retail and Mesoblast are strong performers deserving of a place in most portfolios.
