It's been an interesting week on the ASX, with two household names in particular looking set to become regular features in this '52-week lows' article – at least for a little while.
Greencross Limited (ASX: GXL) announced a revised earnings forecast of 33.5 to 35 cents per share (down from 36cps) after deterioration in West Australian market conditions made it unlikely that the company would hit its initial forecasts.
Shares, already in a slump from highs of $9.50 recently and over $10 earlier in the year, crashed through their previous 52-week low to $6.14 today before recovering to $6.57.
Today's fall illuminates the primary risk associated with aggressive expansion: Buying outlets within a certain price range only works if the outlet can maintain and/or grow its earnings.
However Greencross is still forecasting a 40-46% increase in underlying Earnings Per Share this year, and that kind of performance buys a lot of forgiveness in the hearts of investors.
(Contributor Brendon Lau covers Greencross' recent results in his excellent article here)
Based on its current price tag of 20 times earnings and management assurances that Greencross' growth potential for 2016 and beyond remains unchanged (the group is targeting 'historic growth rates' for revenue, i.e. 24% p.a.), I believe the current pullback looks like a good opportunity to pick up Greencross shares.
Woolworths Limited (ASX: WOW) is back in the naughty corner after its latest quarterly report showed that total sales fell by 1.6% in the past three months.
Due primarily to changes to its petrol retailing business as Caltex Australia Limited (ASX: CTX) exited the partnership to rebrand outlets under its own banner, core Australian Food and Liquor sales grew 2.3% which was far less than the 5.4% recorded by competitor Wesfarmers Ltd (ASX: WES).
Woolworths hasn't had much of an opportunity to turn the business around yet, and as such I continue to believe that recent low prices are even more of a buying opportunity than previously.
With a long-term history of performance and an upcoming $500 million to be invested into supermarket rejuvenation and lowering its cost base, Woolworths looks like a solid income stock trading at a decent discount.
Finally Myob Group Limited (ASX: MYO) today continues a distinguished if unsavoury, tradition of Initial Public Offerings (IPOs) trading below their offer price in their first 52 weeks on the market.
It may be cheating to call Myob at a 52-week low after just a week of trading, but there's no denying that shares weren't cheap on Monday and the stock is down 25 cents or nearly 7% since then.
Despite being the biggest IPO since Medibank Private Ltd (ASX: MPL) last year, based on the uncertainties around its high price and the lack of public released results as yet, I conclude that Myob shares are a hold.
Foolish contributors generally won't encourage shareholders to participate in IPOs because of the tradition of first-year under-performance, but we're more than happy to jump on the bandwagon once a company has a track record.
In fact, Fool Australia's latest stock recommendation is a 2011 IPO that has more than proven its worth – delivering 34% revenue and 15% profit growth to shareholders in the first half of 2015 alone.
