Bottom-fishing: The 11 stocks which have seen their value drop but could still be worth a punt

 
Lucy White
GERMANY-FISHING-CARP
Canaccord has compiled a list of stocks whose depressed value may climb (Source: Getty)

Action in the stock market has certainly livened up the summer this year, as household names such as Provident Financial, Dixons Carphone and the AA have seen millions sheared off their share price after a series of unfortunate events.

Despite these headline casualties, companies whcih suffer such a drop may still hold value. Canaccord Genuity Wealth Management has compiled a list of “bottom-fishing” stocks – those which are cheap due to an inherent problem with the company, but may bounce back.

Read more: Provident Financial share price plummets by a fifth as debts are left uncollected after jobs are cut

“We've done some research looking at some equities we feel have been sold off indiscriminately, but where analysts who cover the stocks are being more positive,” said Canaccord's senior equity analyst Simon McGarry.

“You might call it bottom fishing, but we feel it's a bit more insightful than that. It's looking at stocks that have had a tough time, but might be suffering from 'herd syndrome' where investors have fallen over each other in their rush to get out.”

In general, McGarry noted, second-quarter results for UK equity markets were positive. The FTSE 350 and FTSE 250 grew sales by 5.7 per cent and 8.3 per cent respectively year-on-year, while almost a third fewer companies issued profit warnings compared to the second quarter last year.

But there was a spike in the number of companies which were being sold off aggressively in response to bad news.

Read more: The UK's 12 most shorted stocks revealed: Carillion tops the list, with several household names filling in the ranks

The 11 best companies for bottom-fishing

The companies on Canaccord's current bottom-fishing list are those which seem to have been sold off indiscriminately but which analysts are viewing more positively.

The key characteristics picked up by Canaccord's “equity screen” are where a company is trading at more than 20 per cent below its 12-month high, where earnings per share (EPS) are forecast to grow over the next 12 months and where analysts have been revising their estimates for the current-year projected earnings upwards.

Company name Current share price as a percentage of the 12-month high Change in consensus EPS over three months
Imagination Technologies 44.9 per cent 5.8 per cent
IP Group 56.3 per cent 610.6 per cent
Kenmare Resources 71.3 per cent Zero per cent
Cairn Energy 71.4 per cent 28.4 per cent
Serco 72.4 per cent 1.1 per cent
Ladbrokes Coral 76 per cent Zero per cent
Virgin Money UK 76.2 per cent 2.3 per cent
Imperial Brands 77.2 per cent 0.1 per cent
Indus Gas 77.2 per cent 0.3 per cent
Dignity 78 per cent 0.6 per cent
Redde 78.1 per cent Five per cent

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