The last few months may have been kind to the majority of shares in the ALL ORDINARIES (Index: ^AXAO) (ASX: XAO), but not all of them have fared so well.
Some shares have been beaten down so much they are starting look like bargain buys now. But are they?
Caltex Australia Limited (ASX: CTX)
The shares of this leading fuel retailer have tumbled 25% in the last 12 months. The majority of this decline has come in the last few months following the decision by Woolworths Limited (ASX: WOW) to offload its petrol business. Fuel giant BP looks likely to acquire the 527 fuel outlets for $1.8 billion. It seems unlikely that Caltex will continue to supply these outlets if the acquisition is successful, which could put a dent in its bottom line. However, I believe the market has priced this in now and at a little over 15x trailing earnings Caltex could be a buy.
Flight Centre Travel Group Ltd (ASX: FLT)
This leading travel agent's shares are currently changing hands at just 13x estimated FY 2017's earnings according to CommSec. This is remarkably cheap for a high-quality business such as Flight Centre. However, I do have concerns that trading in the European market could be weaker-than-expected following the Brexit. For this reason I would suggest investors hold off an investment until after its half-year results are announced later this month.
Vita Group Limited (ASX: VTG)
Following a 36% decline in the last six months, investors can pick up shares in the operator of Telstra Corporation Ltd's (ASX: TLS) retail and business stores for a little over 14x trailing earnings. Whilst this sounds like an absolute bargain, like Flight Centre I believe it is best for investors to keep their powder dry until its half-year results are announced this month. The new commercial terms the two parties agreed to are expected to provide volume growth, but also margin compression. Vita Group already operates on slender margins, so there are concerns that its incredible run of profit growth could be coming to an end.
