So far 2022 has thrown up a large number of landmines for local investors including 8 members of the ASX200 that have more than halved over the last 6-months with high growth & valuation names dominating the list. History tells us that buying stocks in a strong downtrend is fraught with danger and from a broad-brush perspective, we should look to buy stocks that are rallying, making higher quarterly highs and growing earnings i.e. not a complicated formula although human nature does draw us in the wrong direction. However, this time of year can skew investors’ logical process as they focus on their tax position more than the normal investment process which can throw up opportunities, but it’s not a smorgasbord of free food as most weak stocks have struggled for legitimate reasons.
From April-May last year WHC tumbled 38% to $1.15, just one year later it’s trading up at $5.45 illustrating there can be nuggets of gold in the hills when negativity goes too far. However, there were far more stocks that were underperforming into EOFY last year that have failed to shake off this mantle with a number dropping out of the ASX200, its important at any time, not just in June, that when we consider stocks in the “naughty corner” we would be investing against the statistics.
MM likes WHC into decent pullbacks
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