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Should you buy Costa and these beaten down ASX shares?

James Mickleboro
Beaten down ASX shares

The Australian share market certainly has been in fine form this year. Since the start of the year the All Ordinaries index has carved out a gain of almost 20%.

Unfortunately, not all shares have been able to follow the market higher.

Three shares that have thoroughly underperformed the All Ordinaries this year are listed below. Are these beaten down ASX shares in the bargain bin?

The Blackmores Limited (ASX: BKL) share price has lost 26% of its value since the start of the year. Investors have been selling the health supplements company’s shares due to the release of a disappointing half year update and bleak guidance for the full year. Its poor performance this year has been blamed largely on softening demand in the China market. Although its shares look reasonably good value now, I think it would be prudent to wait for an improvement in its performance before picking up shares.

The Costa Group Holdings Ltd (ASX: CGC) share price has come under significant pressure and is down almost 43% this year. The catalyst for the horticulture company’s share price crash was a series of guidance downgrades caused by a combination of tough trading conditions, operational issues, and pricing pressures. Although I’m still a little wary of the company and feel that it could be worth waiting for its next results before making a move, its shares do look good value for a long-term and patient investment.

The Superloop Ltd (ASX: SLC) share price has tumbled over 30% since the start of the year. Investors have been heading to the exits in their droves after the fibre optic internet infrastructure company downgraded its full year EBITDA guidance materially at the start of the month. Due to delays in signing a major commercial agreement, Superloop now expects full year EBITDA of $7 million to $8 million in FY 2019. This compares to its previous guidance of between $13 million and $18 million. Whist its shares look very cheap now, I intend to wait and see if things improve in the coming months before considering an investment.

Instead of Superloop, I would be buying one of these dirt cheap growth shares which have much stronger outlooks.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of SUPERLOOP FPO. The Motley Fool Australia owns shares of and has recommended Blackmores Limited and COSTA GRP FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019