Is Now A Great Time To Buy Barclays PLC (-34%), NEXT plc (-29%) & Antofagasta plc (-19%)?

Royston Wild considers the investment case for Barclays PLC (LON: BARC), NEXT plc (LON: NXT) and Antofagasta plc (LON: ANTO).

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Today I’m looking at three FTSE 100 giants attracting many a bargain hunter.

Falling out of fashion

Downtrodden retailer NEXT (LSE: NXT) jolted even lower following March’s shock profit warning, taking total losses during the past six months to almost 30%.

Chief executive Lord Wolfson’s comment that “[this year] may well feel like walking up the down escalator, with a great deal of effort required to stand still” has sent investors scurrying for the exits. The company cautioned that a slowdown in real wage growth has severely hampered consumer spending in recent months.

And activity at the NEXT Directory arm is also beginning to significantly cool. Sales expansion here has slowed “partly… as a result of competitors catching up with our delivery and warehousing capabilities [and] partly as a result of changes in the ways customers are shopping online,” NEXT noted.

The City expects NEXT to print a 2% earnings advance in fiscal 2017, resulting in a very-decent P/E rating of 12.5 times. But with the retailer battling fierce competition at home as well as slowing sales abroad, I reckon now is a dicey time to plough into the business.

Copper conundrum

Copper giant Antofagasta (LSE: ANTO) has seen its stock value erode 19% since mid-October in often-choppy trading conditions.

A weakening US dollar has provided the commodities stock with rare chinks of light. But there’s no escaping the fact that worsening demand indicators from China continue to cast a pall over revenues forecasts, while widescale production ramp-ups are also likely to keep the market amply supplied for several years at least.

Antofagasta itself is planning to navigate a period of low copper prices by hiking its own capacity — expansions at its Antucoya facility should propel group output to 710,000-740,000 tonnes in 2016 from 630,300 tonnes last year.

The City may expect Antofagasta to bounce from three successive bottom-line declines in the current period, with predicted earnings of 12 US cents per share up from 0.6 cents in 2015. I’m not convinced by these heady forecasts and believe an eye-watering P/E ratio of 61.7 times leaves plenty of room for a share price correction should commodities prices resume their downtrend.

Bank on it

A steady slew of bad news has seen investor appetite for Barclays (LSE: BARC) collapse during the past six months and the share has conceded around a third of its value.

The market remains fearful of a huge escalation in PPI bills ahead of an FCA-proposed 2018 deadline. Barclays put away an extra £1.45bn to cover future claims in October-December alone, taking total provisions to £7.4bn. But regulatory woes don’t end here, with investigators also keeping a close eye on Barclays’ trading practices across the US and Asia.

Elsewhere, investors are concerned by signs of cooling UK economic growth, not to mention the potential impact of a ‘leave’ decision in June’s EU referendum. Other concerns include Barclays’ withdrawal from Africa; the ongoing realignment of its Investment Bank; and the prospect of further colossal costs as it splits itself into two units (Barclays UK and Barclays Corporate & International).

Still, recent share price weakness now leaves Barclays dealing on a low P/E ratio of 11.7 times for 2016, the result of an expected 4% earnings decline.

And while I believe further share price weakness could be ahead, I believe now represents a decent time to get in on the bank — the City expects a steady fall in operating costs and a robust top-line recovery to drive earnings up again from next year.

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 recommended Barclays. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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