Today I am looking at the investment case of four recent FTSE fallers.
HSBC Holdings
Banking behemoth HSBC (LSE: HSBA) has trended lower again following a spritely start to October, and the firm conceded 2% during the course of last week. But I believe these recent losses should not discourage investors from piling in — indeed, HSBC’s formidable foothold in South-East Asia should deliver excellent long-term returns in my opinion, while stringent cost-cutting measures in the meantime should keep earnings steaming higher.
Indeed, current prices certainly suggest that HSBC is a snip — the business is anticipated to chalk up earnings growth of 16% and 1% in 2015 and 2016 correspondingly, resulting in ultra-low P/E ratios of 9.9 times and 9.6 times. In addition to this, anticipated dividends of 51 US cents per share for this year and 52 cents for 2016 produce market-busting yields of 6.3% and 6.5% respectively.
Legal & General Group
Life insurance play Legal & General (LSE: LGEN) has also been a victim of subsiding investor appetite, although the stock conceded a modest 1% between last Monday and Friday. Still, I reckon this weakness gives a little more reason for investors to splash the cash. The business has proved to be extremely effective in responding to demographic and legislative requirements both at home and abroad, and just last week launched three multi-asset income funds in the UK in response to recent pension rule changes.
Legal and General is expected to enjoy a 17% bottom-line bounce in 2015, resulting in a very-attractive P/E ratio of just 13 times. And this readout moves to a mere 12.1 times for next year thanks to a predicted 7% earnings rise. And when you factor in dividends of 13.3p per share for 2015 and 14.3p for 2016 — yielding 5.4% and 5.8% — I believe the insurer is a terrific pick for value hunters.
Travis Perkins
I reckon building materials vendor Travis Perkins (LSE: TPK) should continue to report solid sales growth as the British construction market — and more specifically the domestic housing sector — continues to take off. The retailer’s shares shed 2% last week, but I for one certainly wouldn’t sell up, particularly as its plans to build another 400 stores in the next four years will give it greater exposure to an expanding market.
This positive outlook is shared by the City, and Travis Perkins is anticipated to enjoy an 8% earnings uptick this year, and by an extra 14% in 2016. Consequently the firm deals on P/E ratios of 15 times for 2015 and 13.2 times for the following period. And while projected dividends of 46p per share for 2015 and 54.8p for 2016, yielding 2.4% and 2.8% respectively, hardly set the world on fire, I believe payouts should continue tearing higher along with earnings.
KAZ Minerals
I am not as optimistic concerning dedicated copper miner KAZ Minerals (LSE: KAZ), however, and believe the prospect of fresh metal price weakness leaves the company in a precarious position. The stock lost 5% of its value last week and has conceded a shocking 7% so far on Monday thanks to another fall in copper values — three-month copper at the London Metal Exchange was recently trekking back to $5,200 per tonne thanks to yet more worrying data from China.
With producers continuing to flood the market with excess material, I believe KAZ Minerals’ revenues outlook is likely to worsen further. The number crunchers expect the company to finally slip into the red in 2015 with losses of 2.8 US cents per share, extending the steady earnings downtrend of the past few years. And with no dividend on the horizon, I believe the risks far outweigh the rewards at the digger.
