Can JD Wetherspoon plc, Antofagasta plc, John Wood Group PLC And ARM Holdings plc Continue To Defy Gravity?

Today I am looking at a handful of FTSE fighters that have avoided the worst of the recent stock market rout.

JD Wetherspoon

Shares in Wetherspoons (LSE: JDW) have managed to remain broadly afloat despite worsening risk aversion, and the business has risen 1.2% during the past seven days. Although further market turbulence could erase these gains, I reckon the pub chain should enjoy a solid uptrend in the longer term — Wetherspoons’ transformation drive is expected to deliver 30 new pubs both this year and next, while the firm is also shuttering scores of underperforming outlets.

And while plans by the UK government to implement the ‘living wage’ next April threatens margins, investors can take heart from the fact that Wetherspoon’s saloon door continues to swing off its hinges — total sales rose 6.5% in the last quarter. With Britons hoovering up the operator’s cheap booze and pub grub, the City expects earnings growth of 2% and 5% for the years ending July 2015 and 2016 respectively, resulting in attractive P/E ratios of 15.3 times and 14.7 times.


I am not convinced that copper miner Antofagasta (LSE: ANTO) can continue to repel the pressures that have dragged its industry peers into the mire in recent weeks — the stock has edged 3.8% higher over the past week. Copper prices have sunk back towards $5,000 per tonne in Wednesday business as concerns over the Chinese economy rise, and I reckon a plunge back to multi-year lows is an inevitability given the worsening supply/demand imbalance.

Antofagasta reported yesterday that revenues sunk 31.4% during January-June, to $1.79bn, thanks to a collapsing copper price, and a 13% production decline — caused by production problems at the Los Pelambres mine — to 303,400 tonnes hardly helped matters, either. With these problems set to persist the number crunchers expect earnings to crumble 32% in 2015, resulting in a frankly ridiculous P/E ratio of 28.2 times.

John Wood Group

A steady string of contract wins have helped shore up sentiment for oil services specialist John Wood (LSE: WG) in recent days, a factor that has helped the stock keep its head above water with a 7.3% rise during the past week. Still, I reckon a plunge lower can be expected as crude prices keep on tanking — indeed, the firm saw sales dip 19.3% during January-June, to $3.07bn, as customers continue to put larger and larger corks on their capital expenditure plans.

Energy and metals giant BHP Billiton was the latest major player to slash its spending targets this week, delivering a further blow to the sales outlook over at John Wood and its peers. Against this muddy backcloth analysts expect John Wood to endure a 23% earnings slide on 2015, and although a consequent P/E multiple of 11.1 times is a decent reading on paper, I believe the potential for further downgrades leaves this reading looking rather elevated.

ARM Holdings

Microchip builder ARM Holdings (LSE: ARM) has also seen its share price hold firm in the black despite the woes of recent days, and the firm was last 1.2% higher from levels punched a week ago. It is true that fears of market saturation in the smartphone and tablet PC markets are well founded, but investors should take comfort from the Cambridge firm’s top-tier supplier status with manufacturing giants like Apple, and increasingly with the growing phone makers of China.

On top of this, ARM Holdings is also diversifying aggressively into other hot growth sectors, namely networking and servers. As a result, earnings growth of 68% is chalked in for 2015 alone. Although an elevated P/E multiple of 29.5 times could leave ARM Holdings susceptible to a rapid share price decline should investor sentiment keep declining, a PEG number of 0.4 — below the value watermark of 1 — underlines the firm’s great price relative to its growth prospects, a factor that could lessen the potential impact of wider stock market pressures.

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