The S&P/TSX Composite Index suffered another retreat on Thursday, May 2. The index dropped 91 points as the cannabis sector hit major turbulence. This week, I discussed two stocks that hit 52-week lows over the past week. Today, we are going to look at two more that have hit that unwanted point.
Should investors consider it a buy-low opportunity on either of these equities? Let’s dive in.
Sleep Country Canada (TSX: ZZZ)
Sleep Country Canada is an Ontario-based mattress retailer. Shares of Sleep Country fell 3.09% on May 2. The stock closed at a 52-week low of $17.85. Sleep Country stock has plunged 47% from the prior year.
The company released its fourth-quarter and full-year results for 2018 on February 26. Total revenue in 2018 hit a record $623 million, which was up 6.1% from 2017. Gross profit jumped 8.1% to $189.5 million and operating EBITDA rose 5.8% to $105.8 million. Sleep Country opened 17 new stores in fiscal 2018 and renovated or relocated 32 for a total of 49 new concept locations.
There is bearish sentiment surrounding retailers like Sleep Country with the rise of e-commerce platforms. Sleep Country has worked to overcome this disadvantage through the expansion of its online offerings, but there is still considerable skepticism regarding the company’s future in this new environment.
Sleep Country looks like an attractive bargain for value and income investors alike. Its recent slip has pushed its dividend yield to the 4% mark. It last announced a quarterly dividend of $0.185 per share. Sleep Country stock had an RSI of 28 as of close on May 2, which puts it into technically oversold territory in early May.
Pan American Silver (TSX: PAAS)(NASDAQ:PAAS)
Pan American Silver is a Vancouver-based mining company focused exclusively on silver production. Shares of Pan American had dropped 16.2% in 2019 as of close on May 2. The stock hit a 52-week low of $15.90 during trading on May 2 and closed out the day below the $16 mark.
The company announced that it will release its first-quarter results for fiscal 2019 on May 9. The spot price of gold and silver has suffered a sharp retreat in the spring on the back of U.S. dollar strength and signs that central banks may lean away from the dovish course set in late 2018. Stock markets have not responded well to start the month of May. We will see if central banks entertain the idea of a rate move in either direction depending on the market’s trajectory in the spring and summer.
In 2018, silver production at Pan American dipped marginally from the prior year to 24.7 million ounces. Revenues shrank to $784 million compared to $816 million in 2017. Adjusted net earnings also dropped to $59 million, or $0.39 per share, over $77 million, or $0.51 per share, in the previous year.
Pan American and other precious miners will be predictably dependent upon spot prices going forward. There are still bullish indicators for gold and silver as we kick off May, so investors may want to consider adding miners on the cheap right now. Pan American stock had an RSI of 31 as of this writing, which puts it just outside technically oversold territory.
