Almost exactly one year ago, the FTSE 100 hit an all-time high of 7,103. A grateful nation celebrated, and waited for the index to power on to fresh peaks. So here we are, 12 months later, with the FTSE 100 hovering around 6,250, down 12% since those heady days.
The less-than-fabulous listed here are the five worst performers over the last 12 months, according to Laith Khalaf, senior analyst at Hargreaves Lansdown. So are they burnt-out shells today or contrarian gems?
Glencore
Volatile miner Glencore (LSE: GLEN) is the equal-worst performer after falling 48% in a year. Yet it has launched a startling comback lately, rising 72% over the past three months. Mining stocks have enjoyed a rerating, helped by yet another bout of Chinese stimulus, a recovering oil price, and the sense that the sector was over-sold. Personally, I would still leave Glencore well alone. You’ve missed the best of the recovery, and the outlook remains uncertain.
Standard Chartered
Asia-focused bank Standard Chartered (LSE: STAN) also fell 48% over the year, despite a 30% rebound in the last month. Improved market sentiment, recovering commodities, and the reduced emerging market fears have all helped. Markets have also been cheered by chief executive’s Bill Winter’s turnaround plans, which involve managing costs, disposing of assets, and maintaining strong levels of capital and liquidity. However, there’s no quick fix, Q1 income stabilised at $3.3bn but was still 24% down year-on-year. Standard Chartered looks tempting but only if you can hold for five or 10 years, ideally longer.
Antofagasta
Chilean miner Antofagasta (LSE: ANTO) fell 41% over the last year but has also cashed in on the commodity comeback, rising 24% in three months. Slippage in copper production reversed itself in the final quarter of last year, while cost-cutting offset weaker metal prices. Q1 figures showed further growth, with copper production up 7.3% year-on-year to 157,100 tonnes, amid signs the market is beginning to stabilise. Management remains cautious, warning that price growth is likely to remain subdued, and so do I.
Pearson
Pity poor Pearson (LSE: PSON). Its share price is down 38% in the last year and unlike the first three stocks here it continues to fall, slipping 10% in the last month. Pearson endured a tough 2015, with cash flow down 33% amid tough trading conditions, with dropping college enrolments, lower demand for vocational studies and sluggish textbook sales. Although books have survived the internet age, the sheer weight of online educational content remains a threat. Management is restructuring and investors get a juicy yield of 6.42% to encourage them to tough things out, but this looks too tough for me.
Rolls-Royce Holding
Rolls-Royce Holding (LSE: RR) is yet another comeback kid, down 35% over 12 months but up nearly 30% over the last three. The group’s superiority complex was dented by a string of profit warnings, while in February the dividend was halved. But new chief executive Warren East is now stripping down and rebuilding the engine maker. This will make for a bumpy ride: earnings per share are forecast to drop a whopping 57% in 2016, before rebounding 33% in 2017. At today’s valuation of 11.8 times earnings, far-sighted investors may still want to hitch a ride.
