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

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.


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%.


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%.

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