The past year has been marked by extraordinary volatility in global markets – from the Trump tariff saga to an earnings season unlike any other, capped off by the recent AI bubble shakeout.

Against this backdrop, several ASX blue chips now trade at what appear to be significant discounts. For long-term investors, sharp share price pullbacks can create opportunities to buy quality companies at more attractive valuations.

10 biggest losers of the asx 200

Of course, any investment decision should be guided by a meaningful investment strategy. Mark outlines the step-by-step framework for building one here.

In this article I’ll be turning my attention to the three biggest stragglers in the ASX 200 over the past year and explore what our analysts believe lies ahead for them.

Reece Limited REH ★★

  • Fair value: $10
  • Last Price: $12.71 (28/11/25)
  • Price to Fair Value: 1.27
  • Moat Rating: No moat
  • Uncertainty Rating: High

As Australia’s largest distributor of plumbing supplies and bathroom products, Reece commands an estimated 40% local market share with capacity to expand towards 55% by 2033.

This year was challenging for investors. Despite the wider industry posting gains of around 10%, Reece struggled and was weighed down by weak US sales and flat revenue.

reece limited share price vs asx xnj

REH share price vs ASX 200 Industrials XNJ.

Reece entered the competitive North American market in 2018, however returns have yet to exceed cost of capital. In the five years prior to US expansion, return on invested capital averaged 18% but this figure has since halved. With roughly 250 US stores, we estimate the company holds only a low-single-digit market share and earnings are heavily tied to commercial and residential construction.

August earnings season saw the business become a casualty as investors punished flat revenue and a 20% earnings decline. This led us to cut our fair value estimate by 20% which was nearly our largest downgrade of the season. The cut comes after concern about long-term factors like increased competition in Australia, now that the second-largest plumbing supplier, Tradelink, has a new and focused owner. IbisWorld reports Tradelink has around 7% market share.

Cyclicality is also proving a headwind, particularly in the more competitively challenged US business which is fiercely competitive and highly fragmented, with high interest rates dampening construction activity and near-term earnings.

About three-quarters of Reece’s Australia and New Zealand (ANZ) earnings are exposed to the residential sector via new house builds, residential repairs, and renovations. We expect cyclicality in the residential sector to weigh on revenue through fiscal 2026. Subsequently demand should return from fiscal 2027, driven by an undersupply of Australia’s existing housing stock, settling at about 200,00 new homes per year by the end of the decade.

Despite these structural tailwinds, shares remain overvalued at current prices. We do not think there will be significant margin growth in either the ANZ or US businesses over our 10-year forecast. EBITDA margins have been in the mid-teens for the past decade, but the environment is likely to weigh on this as the business competes with smaller peers.

The US business has high-single-digit EBITDA margins, which are about 2% below much larger competitor, Ferguson. The company does not enjoy the same competitive advantages in the US that it does in ANZ, which aids its high margins.

Treasury Wine Estates TWE★★★★★

  • Fair value: $11.5
  • Last Price: $5.82 (28/11/25)
  • Price to Fair Value: 0.5
  • Moat Rating: No moat
  • Uncertainty Rating: Medium

Treasury Wine Estates is one of the world’s largest wine companies operating across three divisions: Penfolds, Treasury Premium Brands and Treasury Americas.

The shares have materially underperformed this year, down 50% year to date, amid investor concern about prolonged weakness in the key Chinese market persisting in the long term. The company also withdrew prior guidance for underlying EBIT growth in fiscal 2026. No new guidance was provided which only intensified unease.

TWE share price vs ASX 200 Consumer Staples XSJ

TWE share price vs ASX 200 Consumer Staples XSJ.

In response, we lower our underlying EBIT forecasts for fiscal 2026 and 2027 by 8% and 7% respectively. The downgrade to the Penfolds division is the key issue. The brand is struggling with weaker-than-expected demand in China, which is a crucial luxury market for the business. Weaker Chinese demand will likely weigh on pricing for the whole segment, particularly in the near term.

Global wine consumption has proven sluggish in recent years, but high-end wines have bucked this trend. We see this pattern in the broader market with luxury wines growing in the US at a 7% CAGR over the last five years, compared with 4% annual declines for commercial and roughly flat for premium wines in the middle ground.

TWE is increasingly focusing on building out the high-end players in its portfolio. With this, the company’s revenue from higher-end wines has risen above 90% in fiscal 2025 from less than half in early 2014. This has eventuated both from growth in higher-end products but also a purposeful reduction of low-end or commercial wine sales.

But wine production is capital intensive, and the industry is very competitive. Return on invested capital has largely trailed the WACC over the last decade. While we forecast returns to eventually exceed WACC over the next five years, the margin is still relatively thin.

Our fair value estimate for TWE is $11.50 per share, meaning it is significantly undervalued at current prices. With continued positive mix shift toward higher-priced wines, we forecast consolidated revenue climbing about 5% per year and operating margins around 29% over the next five years. The shift inevitably introduces higher production costs, but we nonetheless expect expanding profitability.

James Hardie Industries JHX ★★★★

  • Fair value: $42
  • Last Price: $30.37 (28/11/25)
  • Price to Fair Value: 0.72
  • Moat Rating: Wide
  • Uncertainty Rating: High

James Hardie manufactures and markets exterior home and outdoor living products across North America, Europe and the Asia Pacific. The share price has been battered after dealing with a string of governance issues following investor backlash over the $14 billion acquisition of Azek and shifting its primary listing to the NYSE. Further to this, a jarring miss on first-quarter FY26 results in late August sealed the deal.

Despite this, recent half-year results saw improved earnings guidance, with revenue forecast 7% higher for its biggest group segment (siding and trim), providing some much needed confidence. Housing construction in the US but volumes are tracking better than management expected, justifying the upgraded guidance.

Notably, James Hardie is assigned a wide moat rating, primarily due to intangible assets and cost advantage. The group has about 90% market share in the US fibre cement category here it earns 80% of group EBIT. Return on invested capital is forecast to average 28% in the decade to 2034 which is well above the weighted average cost of capital of around 8%.

Near-term lower volumes are expected due to uncertainty and market weakness. But an increasing mix of higher-value, higher-margin products remains a major driver of margin expansion. We forecast revenue and adjusted EBITDA CARGs of 10% and 12% respectively over the 10-year forecast period.

Our fair value estimate of AUD 42 / USD 28 sees James Hardie trading at a meaningful discount at current prices. The market might be concerned about the Azek acquisition and management’s ability to hit sales and cost-saving targets. But a recovery to more normal new housing, as well as renovation and remodelling activity in the US and Australia underpins our fair value estimate.

In the long term, we think James Hardie will maintain above-market growth, driven by market share gains, category expansion, channel and distribution partners, brand investments and innovative products.

JHX share price vs ASX 200 Materials XMJ

Key definitions:

EBITDA stands for earnings before interest, taxes, depreciation, and amortisation. It provides an estimate of pre-tax, cash-like earnings before the adjustment for taxes and non-cash items such as depreciation. It measures a company’s operating performance at the most basic level. 

EBITDA margin is a profitability metric which divides the EBITDA by revenue to show how efficiently a company generates profits from its core business operations.

EBIT or earnings before interest and taxes, goes a level deeper than EBITDA by looking into the company’s capital intensity or the ongoing investment required to sustain the business. This used more often for companies in more capital-intensive industries.

ROIC stands for return on invested capital. It is used to assess a company’s efficiency at allocating the capital under its control to profitable investments. The measure gives a sense of how well a company is using its money to generate returns. Comparing a company’s ROIC with its cost of capital (WACC) reveals whether invested capital was used effectively.

WACC or a company’s weighted average cost of capital refers to the rate at which to discount a company’s future cash flows back to the present. A company’s WAAC accounts for how much a company’s equity and debt funding costs.

More on how to interpret financial ratios here.

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Terms used in this article

Star Rating: Our one- to five-star ratings are guideposts to a broad audience and individuals must consider their own specific investment goals, risk tolerance, and several other factors. A five-star rating means our analysts think the current market price likely represents an excessively pessimistic outlook and that beyond fair risk-adjusted returns are likely over a long timeframe. A one-star rating means our analysts think the market is pricing in an excessively optimistic outlook, limiting upside potential and leaving the investor exposed to capital loss.

Fair Value: Morningstar’s Fair Value estimate results from a detailed projection of a company’s future cash flows, resulting from our analysts’ independent primary research. Price To Fair Value measures the current market price against estimated Fair Value. If a company’s stock trades at $100 and our analysts believe it is worth $200, the price to fair value ratio would be 0.5. A Price to Fair Value over 1 suggests the share is overvalued.

Moat Rating: An economic moat is a structural feature that allows a firm to sustain excess profits over a long period. Companies with a narrow moat are those we believe are more likely than not to sustain excess returns for at least a decade. For wide-moat companies, we have high confidence that excess returns will persist for 10 years and are likely to persist at least 20 years. To learn more about how to identify companies with an economic moat, read this article by Mark LaMonica.

Uncertainty Rating: Morningstar’s Uncertainty Rating is designed to capture the range of potential outcomes for a company. An investor can think of this as the underlying risk of the business. For higher risk businesses with wider ranges of potential outcomes an investor should consider a larger margin of safety or difference between the estimate of what a share is worth and how much an investor pays. This rating is used to assign the margin of safety required before investing, which in turn explicitly drives our stock star rating system. The Uncertainty Rating is aimed at identifying the confidence we should have in assigning a fair value estimate for a stock. Read more about business risk and margin of safety here.