Deciding when to invest in a company can make a large difference to your eventual returns. Even if two investors invest in the same company, one could have chosen a bad time to invest when it was at all time highs whilst the other could have chosen a lower price.
When we're this close to earnings report season for companies, sometimes it might be better to know how the company has performed before buying, otherwise the investment may have been purely speculative.
This is particularly true of businesses that have had a troubling last few months, which is why I'm waiting to read the update from the following businesses before considering buying shares:
REA Group Limited (ASX: REA)
Australia's biggest property website group has been one of the best shares on the ASX over the past decade, but it's hit a speed bump recently.
The Australian property market appears to be slowing down, particularly with the number of listings hitting the market falling. If listings keep falling then REA Group's share price could drop below $50 for a while.
In the long term I think REA Group will continue growing, but a more compelling entry price may present itself after it reports on 9 February 2017. The shares are currently trading at 28.4x FY17's estimated earnings with a trailing grossed up dividend of 2.22%.
Blackmores Limited (ASX: BKL)
Blackmores was the growth king not too long ago, shooting over $210 but now it's back down to $112.70. Investors may have gotten a bit ahead of themselves, but its sales are also tracking lower, with FY16's sales result proving hard to beat.
If sales have declined by more than analysts are expecting then the share price could head below $100 again as it did briefly last time Blackmores gave an update. I'd want to know that sales aren't declining anymore before investing.
Blackmores shares are currently trading at 24.6x FY17's estimated earnings with a trailing grossed up dividend yield of 5.20%.
Monash IVF Group Ltd (ASX: MVF)
Monash IVF is one of Australia's leading IVF companies, along with Virtus Health Ltd (ASX: VRT).
It was Virtus that recently announced a trading update to the ASX saying that total IVF cycles were down by 6% according to Medicare and Virtus experienced a decline of 7.2%, which was even more than the market average. Virtus attributed this to low cost IVF providers taking market share.
Monash IVF is very likely to face the same challenges as Virtus, even if it didn't suffer quite as much of a decline in the number of IVF cycles performed.
Today's price could be a good time to buy Monash IVF shares thanks to the decline it saw on the day of Virtus' announcement. However, its shares could also drop further. It would be a gamble at this point to expect the shares to recover this month, which is why I'm sitting on the sidelines for now.
Monash IVF shares are trading at 12.8x FY17's estimated earnings with a trailing grossed up dividend yield of 7.1%.
Foolish takeaway
Every investment is somewhat of a gamble but I think investing in the above three, particularly Blackmores and Monash IVF would be too much of a speculative choice right now. Instead, why not invest in our number one dividend pick for 2017?
