Are we having a market crash, or not?
First we were, but then we weren't. The US left rates on hold overnight, thankfully postponing the end of the world for ordinary investors.
Add 'market crash next quarter' to your schedule.
For the moment – or should I say yet again – investors have avoided total financial Armageddon, which means today is yet another great day to be investing. This week's losers brings three diverse opportunities to investors, and at least two of them look like particularly good value at today's prices:
Monadelphous Group Limited (ASX: MND) – last traded at $6.52, down 54% for the year
While I'm a long way from venturing into the mining services industry, Monadelphous would probably be my top pick if I had to buy in. Revenues and profits have been smashed in recent years, but the Group's decision to diversify into less cyclical revenues like water management could add some stability to company earnings.
Even so I wouldn't like to try picking where shares will bottom, and I wouldn't be surprised to see Monadelphous shares head lower over the near term.
Retail Food Group Limited (ASX: RFG) – last traded at $4.21, down 10% for the year
Retail Food Group owns a number of franchises like Donut King, Gloria Jeans and Pizza Capers, and the recent decline in its shares seems a little unfounded. Earnings per share rose 35% over the past year after dilutive acquisitions were taken into account, yet the company's shares price has declined 10% in the same time.
Some investors may have been disappointed by the one-off costs than the company expects to incur in the next couple of years as it properly integrates Gloria Jeans and Di Bella coffee. However, shares are well down from recent highs of $7, offer a 6% dividend yield, trade on a Price to Earnings (P/E) ratio of 12, and have plenty of room to grow over the long term.
I wouldn't be surprised to see shares stagnate for a while longer, but I recently turned 4% of my portfolio into Retail Food Group shares, and for good reason.
SEEK Limited (ASX: SEK) – last traded at $11.89, down 30% for the year
Last but not least, SEEK Limited shares have been pummelled twice this year, first after the 'trading update' in June, followed by a second fall in August after the full-year results came out.
Shares have continued to fall despite the 20% growth in revenue and 6% lift in underlying profits reported by management, with investors apparently worried that disruptive businesses and declining employment conditions in Australia could impact earnings.
I also am concerned that declining employment outcomes and changing regulations will impact the SEEK Learning business further – weakness here was one of the main reasons behind the company's fall in June.
However, SEEK occupies a dominant business position domestically and has plenty of room to grow both organically and through acquisition. I suspect shares could fall further on near-term headwinds, but today's prices should hold a lot of appeal for long-term investors.
