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The S&P/ASX 200 Index (ASX:XJO) has maintained a slight positive outlook for 2023, despite some recent turbulence. While the benchmark index is up 0.3% year to date, this figure doesn't even consider the dividends that many of these companies have paid out, adding a layer of complexity to the evaluation. Some ASX 200 shares have thrived this year, nearly doubling in value, while others have gone in the opposite direction. Let's examine the three worst performers as of the year's start and consider whether they present a buying opportunity.
Iress Ltd (ASX:IRE)
Iress Ltd, a company specializing in designing and developing software and services for the financial services industry, has had a challenging year. Its share price is down 42.3% year to date. The initial positive outlook for the year shifted after the company reported a net loss after tax of $140 million, suspended its interim dividend, and downgraded its FY 2023 guidance following its half-year results on 21 August. This news triggered a significant stock drop of 35.5%. Unfortunately, the downward trend continued, with the shares declining by another 12.4% as of 22 August. While the ASX IRE anticipates its cost reduction program and pricing review to be reflected in FY 2024, it's advisable to exercise caution and wait for sustained signs of recovery before considering an investment in this tech stock.
Cromwell Property Group (ASX:CMW)
Cromwell Property Group, an Australian real estate investment trust (REIT) and fund manager, has experienced a decline of 45.2% in its share price this year, which currently stands at 37.2 cents per share. It's worth noting that ASX CMW has also paid out 3.6 cents in dividends. The stock's potential appeal lies in its passive income, with a trailing yield of 9.4%. However, given the current downtrend (a 12.8% decline over the past month), it might be prudent to place this stock on your watchlist and wait for signs of a potential rebound.
The Star Entertainment Group Ltd (ASX:SGR)
The Star Entertainment Group Ltd, a casino owner and operator, has faced a challenging year, with its shares plummeting by 61.3% in 2023. The company's struggles were exacerbated by investigations in New South Wales and Queensland, which alleged non-compliance with obligations related to money laundering and problem gambling. As a result, The ASX SGR paid $100 million in fines. Additionally, a massive capital raising at a considerable discount to the share price led to a 15.3% share price decline. While some analysts have issued buy recommendations, the overall market sentiment remains cautious, given potential interest rate hikes and persistent inflation. With a 22.8% decline in the past month, it might be wise for investors to monitor this stock until it demonstrates a sustainable turnaround.
In conclusion, investing in underperforming ASX 200 shares can be an opportunity, but it should be approached with caution. Timing and thorough research are crucial, and waiting for clear signs of a sustainable recovery is often the wisest strategy. These companies may have faced headwinds, but their future prospects will depend on their ability to navigate challenges and adapt to changing market conditions.
