Brambles Limited’s [ASX:BXB] shares are up 25 cents (2.90%) this morning.
While this may sound positive, Brambles’ shares have dropped 12.66% over the last 12 months, compared to a gain of 7.65% for the S&P/ASX 200 Index.
Brambles closed at 29 cents lower, or 3.25%, at $8.62 on Wednesday. This was after hitting a 52-week low of $8.58 earlier that day.
Brambles is a supply-chain logistics group specialising in the pooling of unit-load equipment, such as reusable pallets, crates and containers. Brambles Limited is the ultimate holding company of the Brambles Group.
The company’s market cap currently sits at AU$11.2 billion.
Why the trend of bad performance?
Firstly, Brambles has been concerned with rising costs of oil and lumber squeezing its margins over the last 12 months, despite the pick up of global economic activity.
But despite the company facing these increased pressures, last month Credit Suisse encouraged investors to buy shares in Brambles.
Why? Their broker said Credit Suisse believes Brambles competitors could be hit harder by the cost pressures, and so their underperforming share price is a good entry price.
However, the price is trading 17 times under the FY19 consensus price-earnings multiple — a 30% discount to its historical value.
Should you buy Brambles low-priced stock?
Short traders (traders who bet on a share going down) have gone all-in on Brambles, especially considering how thinly traded the company is.
With an average of 100 shares changing hands daily, it will take short sellers 5,807 days to cover their BMBLF’s short positions.
This could mean that, if the share was to turn around from here, short traders scrambling to get out of their bad bets could drive the price much higher.
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