3 More FTSE 100 Shares That The Market Hates: Royal Bank of Scotland Group plc, Antofagasta plc And Pearson plc

Royal Bank of Scotland Group plc (LON:RBS), Antofagasta plc (LON:ANTO) and Pearson plc (LON:PSON) are rarely recommended by City analysts. Does this mean that you too should avoid the shares?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Royal Bank of Scotland

Royal Bank of Scotland (LSE: RBS) (NYSE: RBS.US) shares have rallied recently as fears that the bank will be broken up have receded. In the last five trading sessions, shares in RBS are up 11%.

When the mood changes and bears become bulls, demand for stock lifts. The resulting buying pressure can push a company’s share price sharply higher.

There is some evidence that this change is taking place. Forecasts for profits at RBS in 2013 and 2014 have increased in the last month. The shares trade on a 2014 P/E of just 8.9 times earnings.

I don’t care who hates the stock or how much they hate it. I expect to see more big gains from RBS shares before 2013 is done.

Antofagasta

In the last year, analysts’ 2013 EPS (earnings per share) forecasts for Antofagasta (LSE: ANTO) have come down from $1.67 per share to $1.03. In that time, the shares have lost 26% of their value. It is no surprise, therefore, to learn that of all of the companies in the FTSE 100, Antofagasta is one of the least popular with City analysts.

Like all such companies, Antofagasta is a geared play on the market price of the minerals that it extracts. Antofagasta is overwhelmingly about copper. As expectations of economic growth in China have reduced, the price of copper has fallen hard.

Antofagasta shares today trade at 11.6 times consensus forecasts for 2013, with an expected dividend yield of 3.1%.

Pearson

Solid EPS and dividend growth is expected at Pearson (LSE: PSON) (NYSE: PSO.US), this year and next. It is a surprise, therefore, to learn that analysts are reluctant to recommend that the shares be bought.

Anyone looking at Pearson shares needs to remember that only one quarter of Pearson’s revenues come from the Penguin and FT operations. The rest is educational services. Here, Pearson is plugged into a global trend for paid education services. This mix has protected shareholders from the worst of the recent downturn. For example, the group managed to grow net profits in 2008 and 2009.

Pearson share today trade at 15.5 times EPS forecasts for 2013, with a forecast yield of 3.9%.

Picking up shares ahead of a turn in sentiment can lead to big investment returns. For more ways that you can use the stock market to accelerate your wealth-building, check out the latest Motley Fool report “10 Steps To Making A Million In The Market”. This analysis is entirely free and will be delivered to your inbox immediately. Just click here to get your copy today.

> David owns shares in Royal Bank of Scotland but none of the other companies mentioned.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Investing Articles

Modern suburban family houses with car on driveway
Investing Articles

Here’s why Persimmon shares could just be getting started

With a new government now in place, many investors are getting excited about the housing sector again. So are Persimmon…

Read more »

Investing Articles

How to invest £1,000 in an ISA and aim for a second income of £171,523

Dividend stocks are a natural choice for investors seeking a second income. But this might involve missing out on some…

Read more »

Investing Articles

Down over 70% in 5 years, will the TUI share price ever recover?

The last few years have been bumpy for the travel sector. But with the TUI share price still down substantially,…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

The Spirax share price has gone nowhere in five years! Time to buy?

The Spirax share price stands almost exactly where it did five years ago. Our writer asks why? And, more importantly,…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

3 shares I’m avoiding like the plague in today’s stock market

Our writer picks a trio of shares from the London stock market he has no plans to buy right now,…

Read more »

Investing Articles

Up 167% in 2024! Is this growth stock showing any signs of slowing?

With artificial intelligence (AI) changing the world in the last few years, growth stock Nvidia has enjoyed an incredible run.…

Read more »

Young Black woman looking concerned while in front of her laptop
Investing Articles

Lloyds’ share price is dirt cheap! But I’d still avoid it like the plague

Lloyds' share price looks a brilliant bargain at 59p. But closer inspection suggests this could be a FTSE 100 share…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

Here’s how investing £83 a week in FTSE 100 shares could make me rich

By putting less than £90 each week into FTSE 100 shares, this writer thinks he could build a portfolio worth…

Read more »