Standard Chartered PLC, Aggreko plc, Petra Diamonds PLC And Mitchells & Butlers plc Shares Have Sunk By A Third! Is It Time To Load Up?

Royston Wild discusses whether now is the time to pile into Standard Chartered PLC (LON: STAN), Aggreko plc (LON: AGK), Petra Diamonds PLC (LON: PDL) and Mitchells & Butlers plc (LON: MAB).

| 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.

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.

Today I am looking at the prospects of four bombed-out stock behemoths.

Standard Chartered

Shares in embattled Standard Chartered (LSE: STAN) have bounced impressively from the multi-year lows of 624p at the end of September. Still, I believe this represents nothing more than a ‘deadcat bounce’ — the business has conceded a shocking 38% of its value during the past three months alone, and I reckon the likelihood of fresh emerging market fears should send the bank shuttling lower again.

Standard Chartered has persistently failed to get its Asian businesses moving in the right direction, a problem that also continues to fuel chatter of a potential rights issue. The banking goliath is expected to rack up a 36% earnings decline in 2015, resulting in a conventionally-low P/E ratio of 11.3 times. But given the multitude of problems the firm has to overcome, including the threat of further heavy regulatory fines, I believe the stock remains an unappealing prospect even at these prices.

Aggreko

Like Standard Chartered, power generator provider Aggreko (LSE: AGK) has also seen investor appetite collapse in recent times, and the business is dealing 27% lower from levels printed at the start of July. This comes as little surprise as slowing activity in the North American oil and gas sector hamper revenues growth.

Indeed, Aggreko announced in the period that underlying revenues slid 2% during January-June, pushing pre-tax profit 21% lower from a year earlier, to £102m. And naturally the prospect of further oil price weakness, not to mention worsening security conditions in Yemen, could keep the firm under heavy pressure looking ahead. Aggreko is expected to endure a 10% earnings slip in 2015, and a consequent P/E multiple of 13.2 times is still too heady, in my opinion.

Petra Diamonds

Precious stones digger Petra Diamonds (LSE: PDL) has also endured a torrid time of late and is trading at a 33% discount to levels seen just three months ago. Investor confidence was first shaken by news in July that revenues had slumped by a tenth during the 12 months to June 2015, to $425m, thanks to lower diamond prices and reduced ore quality at its Cullinan and Finsch assets.

On top of this, Petra Diamonds expects diamond prices to remain stagnant in fiscal 2016, while cash costs in South Africa and Zimbabwe advance 8% and 4% respectively. The digger remains bullish on its long-term production prospects, and expects output to hit 5 million carats by 2019, up from 3.2 million last year. But given the slew of production problems the firm has already encountered, I believe Petra Diamonds is in danger of extending the 32% bottom-line slide of 2015, mitigating the appeal of a low P/E reading of 11.3 times.

Mitchells & Butlers

Pub operator Mitchells & Butlers (LSE: MAB) has seen its stock price collapse 30% in the past three months alone, but — unlike the firms mentioned above — I reckon this could provide a solid buying opportunity. The Midlands business advised last month that like-for-like sales declined 0.7% in the seven weeks to September 12, and that it expects growth in the year to September 2015 to be towards “the bottom end of the range of current market expectations” as a result.

Mitchells and Butlers has suffered from adverse weather conditions more recently, and looking ahead the introduction of the ‘Living Wage’ from next April could put margins under severe stress. Still, the chain’s rampant expansion drive — the firm opened 14 new sites and converted a further 48 in fiscal 2015 — could provide rich rewards in the coming years. With an expected 9% earnings bounce in 2016 creating a P/E ratio of just 8.3 times, I believe Mitchells and Butlers could be worth a punt at current prices.

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.

Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Empty Stocks and Shares ISA? I’d snap up these 3 stocks to start with!

Sumayya Mansoor explains how she would start to build wealth from scratch with an empty Stocks and Shares ISA and…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

7.7% yield and going cheap! Why is this unknown FTSE 250 stock flying?

It's no household name, but there's one FTSE 250 stock with a high dividend yield and booming profits that looks…

Read more »

Photo of a man going through financial problems
Investing Articles

I’d stop staring at the Nvidia share price and buy this FTSE 100 stock instead

This writer reckons there is a smarter way to invest in Nvidia today without taking on stock-specific risk. Here is…

Read more »

Young lady working from home office during coronavirus pandemic.
Top Stocks

5 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Young Asian man drinking coffee at home and looking at his phone
Dividend Shares

These 3 FTSE 250 stocks offer me the highest dividend yields, but should I buy?

Jon Smith considers FTSE 250 shares with a very high yield, but questions whether the income is going to be…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Is FTSE 100 takeover target DS Smith a great buy?

A mega-merger between FTSE 100 giants DS Smith and Mondi has the City abuzz. But is there any value in…

Read more »

Young Black man sat in front of laptop while wearing headphones
Investing Articles

The WPP share price dips as profits fall. Here’s why it could be a top dividend buy

I'm starting to think the WPP share price undervalues the stock, especially if the long-term dividend outlook comes good.

Read more »

Black father and two young daughters dancing at home
Investing Articles

A £3K investment buys me 632 shares in 2 stocks for a second income!

This Fool explains how a second income is possible through dividend-paying stocks and details two picks that could help her.

Read more »