After a bright start to the week, FTSE 100 shares took a bit of a beating on Thursday and Friday. This followed worrying news about two mid-sized Californian banks teetering on the brink of failure.
Shares slide
As a result of this latest bout of investor nervousness, the FTSE 100 is down 2.5% this week. Of course, some shares sold off more than others in this latest market dip. Here are two that took a harder hit than most this week.
Faller #1: Ocado Group
The worst performer was Ocado Group (LSE: OCDO). Shares in the online supermarket and provider of logistics technology plunged by 14.3% in five trading days, ending the week at 451.1p.
This latest steep slide leaves Ocado stock down by 61.9% over the past year. Ouch! Also, this one-time growth wonder-stock has lost 21.8% of its value over the last five years.
Then again, Ocado shares are still well above their 52-week low of 380.3p, hit on 13 October last year. But they’re also far, far short of their 52-week high of 1,316.5p, hit exactly a year ago.
Today, this firm is valued at a mere £3.7bn, pushing it into the FTSE 100’s relegation zone to be demoted at the next quarterly reshuffle. And in 23 years of trading, Ocado has burned through £1.5bn of cash and yet is still barely profitable.
I don’t own Ocado shares — and it’s for the two reasons above that I won’t catch this ‘falling knife’ by buying this stock.
However, I could well be wrong and Ocado shares could stage yet another comeback — especially if it keeps signing big licensing deals with overseas grocery chains. Nevertheless, this volatile stock is too rich for my blood.
Faller #2: Barclays
Barclays (LSE: BARC) was the FTSE 100’s fourth-biggest faller this week, dropping 8.3% to close at 157.42p. This values the Blue Eagle bank at a round £25bn, making it a FTSE 100 stalwart.
This dip leaves shares in the Big Four bank down 0.2% over the past year. Meanwhile, the stock has lost 25.9% of its value over the last five years.
For the record, I’m about as bullish on Barclays as I am bearish about Ocado. That’s because I regard this FTSE 100 share as a classic value/dividend/recovery play for me as a patient, long-term investor.
Right now, Barclays trades on a price-to-earnings ratio of 5.3 and an earnings yield of 18.9%. To me, these figures suggest that this stock has been hurled into the FTSE 100’s bargain bin. Perhaps investors expect Barclays’ earnings to tumble this year if the UK enters a prolonged recession?
In addition, this bank share offers a market-beating dividend yield of 4.6% a year, versus below 4% for the wider Footsie. Even better, this cash yield is covered a mighty 4.1 times by trailing earnings. To me, this suggests that Barclays’ dividend is both rock-solid and has room to grow.
Then again, bank shares tend to perform poorly during recessions due to rising loan losses. Even so, I’d buy this FTSE 100 share today — if I didn’t already own it!
