Another week of 2014 is in the books, and for these three companies trading at 52-week lows, it was a week to forget.
TransAlta Corp (TSX:TA)
Alberta-based power generator TransAlta took a hit on February 28 when its stock fell to a new 52-week low of $12.43. Moody’s lowering its credit outlook for the company to negative like contributed to this fall, and may be a warning sign that Moody’s is prepared to lower its debt rating also. This downgrade was sparked by a fourth quarter that failed to meet expectations, with EBITDA falling from $312 million in 2012 to $242 million in 2013.
However, the more pressing issue facing the company is the allegation that TransAlta manipulated Alberta’s electricity market by closing down plants to inflate prices. This has sparked an investigation by the province and has garnered the attention of the Premier. TransAlta denies these allegations.
February 26 marked a new 52-week low of $5.44 for this business-oriented wireless/broadband communications service provider. A weak fourth quarter, which saw $12.9 million in revenues and a loss of $0.9 million, drove analysts to lower TeraGo’s price targets from $11-$9 to $7-$6.50. Another factor is the revelation by the company that it will shift its business plan to become an IT services provider. This adds plenty of risk to the already rocky company and has led the company to be labeled “sector underperform” by CIBC World Markets.
Halogen Software Inc (TSX:HGN)
A provider of cloud-based talent management solutions (performance management, learning and development, succession planning and compensation), Halogen fell to a new 52-week low of $11.36 on February 28. On the heels of its fourth-quarter results, analysts at Canaccord Genuity lowered their price target for Halogen Software from $19 to $18 and declared a “buy” rating for the stock. Q4 2013 revenues rose to $12.6 million, up from $10.2 million in 2012 and $12.3 million in 2011. This was marred by a Q4 loss of $2.1 million, down from $6.4 in Q4 2012, and a year end loss of $12.8 million, down from $19.6 million in 2012.
These results capped off a year that saw Halogen Software’s largest increase in customers. But that news came with a declaration from management that, “We expect to continue to incur losses for the foreseeable future as we are focused on growing recurring revenue and market share and not short-term profitability”
Foolish bottom line
The market is full of highs and lows and savvy investors know when to jump on a good deal. For these companies, a week like this could turn into an opportunity for investors, if they can ride out the waves of the market and learn from its missteps.