August has been a shocking month for the three companies in today's article – each has lost more than 10% of its share price. Unfortunately for shareholders in most cases the fall appears to be justified, but there is also ample scope for a turnaround.
So should you buy, sell or hold? Read on, and find out:
Cash Converters International Ltd (ASX: CCV) – last traded at $0.45, down 55% for the year
Wait a minute, didn't Cash Converters just recover from a class action? In 2015 Cash Converters had to hand over approximately $23m to cover a legal settlement against them. No sooner than when that dispute was concluded, there was another class action launched against the company for a further $30m.
Given that the success of this latest class action could encourage more claimants to air out 'skeletons in the closet', so to speak, I feel it would be risky to pile in just yet.
However, the core Cash Converters business continues to grow and much of the downside looks priced in, meaning it could be a good time for a patient investor to start building a small stake.
Sky Network Television Ltd (ASX: SKT) – last traded at $4.44, down 24% for the year
Sky Network shares have taken a hammering in the past week after the company released its 'strongest financial result to date'. Part of the reason was a decline in total customer numbers, which fell 1.6% despite revenue and profit rising 2% and 6.4% respectively.
Sky also experienced a reasonable increase in Average Revenue Per User/subscriber (ARPU) with that rising 2.6% on 2014 to set a new record. All in all it looks as though Sky is getting better at selling more products to existing customers, but struggling to attract new ones.
Chairman Peter Macourt told investors that stagnant customer numbers were typical during times of change, which Sky was now experiencing. Over the near term the company hopes to attract new users through a wider variety of products and content delivery methods.
Despite disappointed investor expectations, Sky shares look to have fallen as low as they will go in the absence of any further bad news.
Veda Group Ltd (ASX: VED) – last traded at $2.07, down 7% for the year
Finally, credit rating provider Veda Group has also seen its shares dip in the lead up to/aftermath of its annual report, despite posting double-digit profit growth and exceeding the guidance provided by management.
Investors were apparently disappointed in the results, realising that the company's price tag (P/E) of 27 times earnings was probably a little high given the outlook for low double-digit growth in the future. However, Veda remains an interesting long-term opportunity given its increasing penetration into the consumer credit market. Like Sky, it looks to have fallen as low as it will go in the absence of further bad news.
