JB Hi-Fi, Monadelphous and Beach Energy are all down more than 15% in price in the past month or so, but are they buying opportunities now? Here's why they are down and my view as to what to expect from them.
Electronics specialty retailer JB Hi-Fi Limited (ASX: JBH) has been sagging in price since early August, down 22% from about $20 to $15.51. Investors are not seeing a lot of hope in most retailers currently. Still, it had 10.3% higher net profits in FY 2014, raised its dividend and even had a share buyback.
In FY 2015, the company plans to open eight new stores, as well as increase its JB Hi-Fi HOME format stores from 22 to 52. These HOME stores had good like-for-like sales in FY 2014, so they could drive sales revenue and earnings in the first half of FY 2015. You should wait a bit to see if the $15 – $15.50 price can hold well. If it can, it could be a good point to starting buying at.
Monadelphous Group Limited (ASX: MND), the engineering and construction company, is still taking a pounding from the mining downturn. The company gets about 100% of its revenue from within Australia, so its business is highly correlated to the Australian economy.
Going for under $14 a share, it could fall one or two dollars more before finding a bottom. The twin problems of both iron ore and coal price drops don't seem to be getting better soon. Mining contract work could go lower for some time. I would say avoid this stock.
Energy producer and shale oil developer Beach Energy Limited (ASX: BPT) has forecast a slight fall in oil production for FY 2015, but that is mostly due to FY 2014 having record high production. After the surge in production and a rising share price, the market has cooled for the stock. The company will start a contract with Origin Energy Ltd (ASX: ORG) in 2015 to send oil and gas to the APLNG project in Queensland for LNG exports.
It is expected the energy majors like Origin and Santos Ltd (ASX: STO) will be trying to collect all available gas since there may be a shortfall in the gas needed for LNG exports. This could push gas prices up and Beach Energy could have higher sales revenue from it. The company's share price may slip a little more, but I think it is nearing a bottom now.
Of these three, I would prefer Beach Energy, but energy stocks can be tricky if things don't go to plan for developments. If you are not big on resource stocks, then you might be more interested in lucrative tech stocks. For example, one certain tech stock may be ready to take off soon.
The Motley Fool has just released a special video report on our analysts' #1 ASX tech pick — all about the one Australian company poised to win big from the 'cloud computing' trend.
(Hint: The shares are already up over 100%!) Click here to claim your FREE copy.
