As I wrote last week, with the S&P/ASX 200 (INDEXASX:XJO) index rising so strongly in recent days, the only stocks sinking to the bottom are those that deserve to be there – not that this is any comfort for shareholders in said stocks.
Here are three of the latest stocks to reach new lows this year:
Navitas Limited (ASX: NVT) – last traded at $4.08, down 21% for the year
Educational provider Navitas has dropped nearly 10% this week alone, as the market actively reprices it in light of the company's announcement that 2016 will be 'challenging' and likely to result in flat results.
While educational providers have been hot property for shareholders in recent years, I have steered clear of the sector as I feel that outcomes for students don't really reflect the benefits of undertaking many of the courses on offer. With the latest results from the Australian Graduates Survey indicating outcomes for graduates are among the worst in twenty years, I expect course providers to wear the backlash.
Navitas does have some positive tailwinds in the form of rising numbers of international students, but in light of its guidance for a flat 2016 I think the stock could see further falls in the near future.
Acrux Limited (ASX: ACR) – last traded at $0.69, down 54% for the year
Pharmaceutical stock Acrux is even worse off than Navitas, with its price having plummeted 25% in the past five trading days. Foolish writer Tom Richardson covered Acrux's recent results and wrote:
"Its commercial partner US pharmaceutical giant Eli Lilly reported net sales for Axiron of US$32.4 million for the quarter ending June 30 2015, which is a big fall from the prior quarter's US$39.1 million. The numbers are even worse compared to the prior corresponding quarter's US$47.1 million and paint a worrying picture for the future of Acrux."
Sales of Axiron – a testosterone booster – have slumped following the decision of US Food and Drug Administration (FDA) to increase labelling requirements on the drug and order doctors to prescribe it only for patients with actual low testosterone levels.
While the price of Acrux is low enough that some investors may be thinking of swooping in, I would advise against it as it is impossible to evaluate how much further sales might be hurt by an FDA crackdown.
A Price to Earnings (P/E) equation of 12 might look cheap now, but with sales still falling it's a risky bet. With so many other great options out there, why would you bother?
Orocobre Limited (ASX: ORE) – last traded at $1.90, down 30% for the year
Orocobre suffered a hit in the past two months after problems were encountered during a ramp-up of the company's Olaroz lithium production facilities. The problems, due to equipment limitations and and inefficient operating practices have now mostly been resolved.
Shares weakened further after a $32 million capital raising was conducted in June and the company's quarterly update was released on Tuesday. While the company is experiencing its share of problems, the lithium market appears to be buoyant, sales are increasing and costs are decreasing at Orocobre's operations. I expect shares have gone roughly as low as they will go in the absence of further bad news.
