9 Stocks Down More Than 40% From 52-week Highs, Should You Buy?

Markets have recovered a good bit over the last few weeks, with the Sensex now once again nearing the 60,000 points mark. It maybe time to buy stocks from the broader markets, where stocks are still languishing.

List of stocks down 40% from highs

Stock name	Current market price	52-week high	Down %
ICRTC	716.8	1279	43.96%
Chemplast Sanmar	420	826	49.20%
Mastek	1909	3669	47.78%
Lux	1768	4664	61.93%
Everest Kanto	118	291	59.44%
Nahar Spinning	360	690	49%
ICICI Securities	502	896	43.83%
Finolex Industries	145	244	45.80%
Indo Count Industries	147	315	53.25%

Should you buy these stocks at 52-week lows?

Some of these stocks have been hit, because of fundamental reasons, including margin erosion and pricing pressures. However, some stocks like Nahar Spinning are trading at very low valuations, which make them attractive. Stocks like ICICI Securities offer a very good dividend yield, which once again makes them good bets for the long-term. Some stocks like ICRTC are pure monopoly plays, which should help.

Small and midcaps maybe in action

Interestingly, all of the above are small and midcap stocks, where the action could be. "While the headline indices continued to consolidate, the broader market is seeing action in midcaps and smallcaps where the valuation is still attractive. Thus momentum is likely to gather pace in them with lot many stock specific action," says Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

Market sentiments to dictate momentum for the above stocks

Largely the market momentum would dictate the direction for most of the above stocks, unless there is a sharp recovery in earnings. Some of the above stocks have fallen largely because of a drop in the earnings. Apart from that, inflationary pressures have also eroded margins for many of these companies. However, as mentioned small and midcap stocks could be the ones to be most sort after. Overall, it is not a bad idea to buy into some of the stocks in small quantities, as the downside risk seems low at the moment.