Hello, Fools. I’m here to highlight three stocks that have plunged sharply over the past five trading days. Why? Because the greatest wealth in the stock market is made by buying quality companies
- during periods of severe overall pessimism;
- when they’re being overlooked by professional analysts; or
- when they’re selling well below intrinsic value.
The S&P/TSX Composite Index rallied about 3.5% last week, so this list might provide you with some solid contrarian ideas.
Let’s get to it.
Crashing down to earth
Kicking off our list is Maxar Technologies (TSX:MAXR)(NYSE:MAXR), whose shares plummeted a whopping 50% last week. The space satellite technologist is now off a disastrous 90% over the past year versus a gain of 14% for the S&P/TSX Capped Information Technology Index.
Maxar’s 2018 was filled with bad news, and 2019 is starting off on the same note. On Monday, the company said one of its key satellites, WorldView-4, failed. Specifically, it will no longer be able to take pictures and will likely not be recoverable, triggering concerns on Bay Street over a loss of sales and lower earnings growth going forward.
Maxar’s beta of 3.5 makes it a particularly risky play. But with the stock sitting at record lows, aggressive investors might want to pounce on Mr. Market’s seemingly overblown reaction.
Next up, we have Pretium Resources (TSX:PVG)(NYSE:PVG), which plunged 19% last week. Shares of the precious metals miner are now down 33% over the past year versus a loss of 14% for the S&P/TSX Capped Materials Index.
Triggering last week’s loss was a disappointing production update. In the second half of 2018, Pretium’s Brucejack mine produced about 189,000 ounces of gold, representing 95% of its guidance for 200,000 ounces.
Of course, hitting 95% of your production guidance can also be seen in a bullish light.
“Our successes can be attributed to the hard work of our team and the consistent profitability of the high-grade Brucejack Mine — the cornerstone of our plan to build Pretium as a Tier 1 Canadian gold producer,” said President and CEO Joseph Ovsenek.
Currently, the stock sports a paltry forward P/E of seven.
Rounding out our list is Eldorado Gold (TSX:ELD)(NYSE:EGO), whose stock sank 7% last week. Shares of the gold miner are now down 42% over the past six months versus a loss of 13% for the S&P/TSX Capped Materials Index.
Eldorado isn’t for risk-averse investors. In the most recent quarter, the company posted a massive loss of $128 million as revenue sank 15% to $81.1 million. Moreover, its debt load stands at an alarming $769 million.
On the bright side, gold production rose 21% during the quarter, which prompted management to raise its production guidance yet again.
“[W]e are well positioned to advance our development projects in order to achieve annual gold production of 600,000 ounces per year in 2021,” said President and CEO George Burns.
If you can handle the high beta of three, Eldorado might be worth a small speculative wager.
The bottom line
There you have it, Fools: three beaten-down stocks that you should check out.
They aren’t formal recommendations, of course. They’re simply a starting point for more research. Trying to catch a falling knife can be extremely dangerous, so plenty of due diligence is still required.
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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Maxar is a recommendation of Stock Advisor Canada.