- Value investors are also looking at beaten down stocks this Christmas, contrary to popular rallying stocks.
- STP, VR1 and MFG are some of the stocks that have witnessed sharp selling this month.
- Investors should do their due diligence before investing in any company.
Just like Santa, the Santa Claus rally is also highly popular during the Christmas season. Tis the season when investors usually flock towards shares that are either rallying or about to. However, the Santa Claus rally (if it occurs) is known to last for a short span of time, usually a week, leaving investors with expensive buys.
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In a contrary opinion, why not to look for beaten down quality shares, that are trading at a discount rather than chasing high-flying stocks. On that note, let us have a look at three beaten down ASX shares, investors are keeping an eye on for Christmas. All the below mentioned shares have a market capitalisation of over AU$100 million.
- Step One Clothing Limited (ASX:STP)
Step One Clothing is a new listing on the Australian bourse, making its debut last month. The company is an online direct-to-customer (D2C) player in men’s underwear segment, having a market capitalisation of AU$277.8 million. The stock is down 45.1% this month, as of 24 December 2021.
STP shares plummeted 34.8% on 22 December 2021 after the company identified a potential overclaim of GST credits which was not previously identified. The company expected a financial impact of AU$1.6 million in FY22, which led to a severe fall in its shares. However, this is a one-time impact and value investors are keeping the shares on radar.
2. Viction Technologies Limited (ASX:VR1)
Viction Technologies is a software company that offers real-time software solutions such as 3D real-time configurator, 3D modelling etc. The company has a market capitalisation of AU$142.6 million and its revenue for FY21 increased AU$3.47 million, from AU$3.05 million in FY20.
In December, the stock has fallen 44.7% as of the last closing price of AU$0.14, as of 24 December 2021. However, it seems to be just a correction in the ongoing rally which has taken the stock 133.3% up in the last six months.
3. Magellan Financial Group Limited (ASX:MFG)
Magellan Financial Group is an Australian investment manager primarily focusing on investments in global equities, catering to both retail and institutional clients. In December 2021, MFG shares have nosedived 36.8% to the last closing price of AU$21.21.
On 20 December 2021, MFG shares tanked 32.9% in response to the exit of St James’s Place which had an account with MFG and represented approximately 12% of the group’s current total annual revenue.
Investing in beaten down stocks is generally a contrary bet and therefore could be a risky one too. It’s like trying to catch a falling knife and requires a high-risk appetite and well capital adequacy. Therefore, before investing in these stocks, investors must do their own due diligence.