5 Worst-Performing FTSE 100 Stocks as Markets Correct

Housebuilders and resource firms have not fared well as the FTSE 100 looks set for its sixth consecutive day of losses. Here are the worst-performing shares in that time

David Brenchley 6 February, 2018 | 2:01PM
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Vosdafone shop front, worst-performing FTSE 100 stocks, stock market sell off

After hitting a fresh record closing high of 7,779 on 12 January, the FTSE 100 started 2018 as it had finished 2017 – with unerring momentum. Since the start of December, the UK’s blue-chip index had climbed 6.2%.

But the strong bull run stalled soon after, and now it looks to have reversed. The sharp decline in US stock indices has rightly stolen the headlines this week. But the FTSE 100 has been declining for a week now.

Since close of play last Monday, the index is down 6%. Its current level is the lowest it’s been for nine months and the index briefly touched a low not seen since late December 2016. The FTSE 100 is on for its longest losing streak – six consecutive days – in 11 months, when it pared back by just 0.92%.

Should UK investors be worried? After an extended bull run for risk assets, commentators have generally been expecting a correction. And that’s what this is expected to be, rather than anything longer lasting.

The FTSE 100 had begun its pull back due to a strengthening currency, says Ben Yearsley, director at Shore Financial Planning. Of course, over 70% of earnings from UK blue chips is derived from overseas, meaning this is not too worrying. “Investors shouldn’t panic; the worst thing to do is to sell out after the event,” says Yearsley.

Here are the five worst-performing stocks listed on the FTSE 100, from close of trading on Monday 29 January to 11.20am on Tuesday 6 February.

Scottish Mortgage (SMT)

The global investment trust behemoth Scottish Mortgage, run by Baillie Gifford’s James Anderson, has seen by far the worst share price fall in the past eight days. That’s unsurprising considering its portfolio is dominated by large US tech stocks.

Scottish Mortgage has seen a decline of 12.5% to 417p – 6% of which came in morning trading today. All its top holdings have been in the firing line, most notably Tencent (0070), which fell by 7% today.

CRH (CRH)

Over half of building materials manufacturer CRH’s sales are in the US, meaning the pound’s strength against the US dollar has hit revenues. As a result, its share price declined by 6.1% over the course of 2017, according to recent data from broker AJ Bell.

Latterly, it’s down 9.51% over our time period and 7.8% year-to-date. Its current share price of £24.56 is the lowest it’s been since September 2016. Still, Morningstar analyst Kristoffer Inton is a fan and has a four-star rating on the stock, suggesting it is under-valued.

Inton’s fair value of £31 suggests upside of 26%. He expects a strong near-term recovery in demand for CRH’s materials in the Americas, with EBITDA margins exceeding 18% by the end of its forecast period.

Vodafone (VOD)

Vodafone is a popular stock for UK investors and was one of the 10 most bought shares on The Share Centre’s platform in 2017 due to its steady stream of income payments.

While the share price, at 205p, is down 2.5% today, it saw a bigger fall last Thursday. That followed press speculation that it was in talks with Liberty Global over a potential transaction. Vodafone confirmed talks but denied a full merger was on the cards. Vodafone is interested in buying Liberty’s cable assets in Continental Europe, it insisted.

Morningstar analyst says he thinks Vodafone shares are undervalued, with a three-star rating and fair value estimate of 250p. He thinks a deal to merge the two companies' German operations will fail, but sees success in other smaller markets like Hungary, Romania and the Czech Republic.

Barratt Developments (BDEV)

After being one of the hardest-hit sectors in the wake of June 2016’s EU referendum, housebuilders fought back with a vengeance over the next 18 months, more than doubling.

However, they have found it difficult to keep that momentum going. Weakening ever since its October record high of 705p, Barratt has fallen 20% to a 10-month low 559p currently.

It’s down 9.38% since 29 January, with rivals Berkeley (BKG), Persimmon (PSN) and Taylor Wimpey (TW.) not far behind. All three are down between 7% and 7.5%.

Broker Barclays remains broadly neutral on the outlook for the sector, with just three ‘overweight’ ratings out of the 12 stocks it covers. One of those is Barratt, where it sees upside of 17.7% to 658p.

Glencore (GLEN)

Another sector that has struggled in recent days is resources. Oil majors Shell (RDSB) and BP (BP.) are down 8.7% and 6.6% respectively, with miner Anglo American at -6.26%.

But the two biggest losers, at fifth and sixth in our list, are fellow miners Glencore, down 9.24%, and Randgold Resources (RRS), down 8.98%.

Last week, Glencore reported fourth-quarter production broadly in line with guidance ahead of full-year results out later this month. It added that production of cobalt, a metal used in electric vehicle batteries, would rise 42% this year to 39,000 tonnes.

Morningstar analyst David Hodge expects to see even more downside, with a one-star rating meaning it’s over-valued. His fair value estimate of 105p suggests the stock could slide a further three-quarters.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Barratt Developments PLC474.20 GBX-0.55Rating
Berkeley Group Holdings (The) PLC4,730.00 GBX-0.55Rating
BP PLC471.00 GBX0.11Rating
CRH PLC5,898.00 GBX-1.73Rating
Glencore PLC454.70 GBX-1.99Rating
Persimmon PLC1,355.50 GBX-0.55Rating
Scottish Mortgage Ord888.60 GBX-1.00Rating
Taylor Wimpey PLC144.00 GBX-0.41Rating
Tencent Holdings Ltd381.40 HKD-1.60Rating
Vodafone Group PLC71.62 GBX-0.91Rating

About Author

David Brenchley

David Brenchley  is a Reporter for Morningstar.co.uk

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