Some big names have fallen from grace in recent weeks. Westpac Banking Corp (ASX: WBC) hit its lowest point all year just last week, while Woolworths Limited (ASX: WOW) and others have done the same in earlier months.
With a falling ASX and reporting season coming up it's inevitable that Mr Market will claim a few more scalps, and here are this week's downtrodden stocks:
Seven West Media Ltd (ASX: SWM) – last traded at $1.01, down 38.5% for the year
Seven West Media shares have been impacted by competitor Nine Entertainment Co Holdings Ltd (ASX: NEC) which indicated that its earnings would fall this year thanks to a more difficult than expected free-to-air advertising market.
Seven management released an announcement this morning confirming its full-year guidance was accurate and reaffirming that its ratings performance was strong, 'delivering the largest gap to our closest competitor since 2011.' Investors don't seem too reassured by the news, and shares traded down again today.
Given the headwinds facing the sector and the availability of better targeted and more penetrative advertising on the internet, I'm not a buyer of Seven West shares today. I expect shares have fallen roughly as far as they will go in the short-term however, especially if the company successfully meets its profit guidance in coming months.
Woolworths Limited (ASX: WOW) – last traded at $26.94, down 26.5% for the year
Woolies shareholders are surely wondering when the turnaround actually begins since the company announced a $650 million investment in its Victorian stores over the next three years.
Woolies will create an additional 20 stores and employ another 2,000 staff full-time, an increase of ~3% and ~4% respectively on previous figures. Also included in the figure is another distribution centre and a meat processing facility in Laverton which the company expects will improve its product offering.
Shares headed down further on the news, and I would suggest that investors can expect more of the same in future reporting periods as Woolworths refurbishes more stores and adjusts its margins to compete more effectively with Wesfarmers Ltd (ASX: WES), Aldi, and new entrant, Lidl. Woolworths is a tempting buy at current prices, but I wouldn't be surprised to see shares head lower in the short term.
Affinity Education Group Ltd (ASX: AFJ) – last traded at $0.92, down 26.8% for the year
Shares in Affinity Education have slid further since last week's appearance, on no news and low volume. One possibility is that a couple of shrewd investors are reducing their exposure for fear that shares being released from escrow next week (15 June) could be sold on the market immediately, impacting prices.
Alternatively investors could be concerned that the company may plan to release a negative market update before its six-month report is released. Or, they could be selling out in fear that the upcoming report may not be as good as expected. Or, it may just be the market doing what the market does, and offering shares at a pretty low price.
I would wait for AFJ's report to see how occupancy and profitability are tracking before considering a purchase, however I now think that shares are roughly as low as they will go in the short term.
