Why Melrose Industries PLC, SOCO International plc & Unilever Plc Should Lag The FTSE 100 Today

The FTSE 100 (FTSEINDICES: ^FTSE) is still up on its 127 point plunge earlier in the week, but even yesterday’s bumper gains didn’t fully make up the shortfall, and presently the index is trading down 45 points at 6,778.

A number of leading blue-chips dragged the market lower following disappointing results, as well as several companies — including the big miners Rio Tinto and BHP Billiton — going ex dividend.

Standard Chartered and Admiral were able to prop things up after their trading updates were better received, with Admiral the top FTSE 100 riser on a 7% profit increase.


Engineering buyout firm Melrose (LSE: MRO) was the leading FTSE 100 faller after the company offered a cautious outlook for the year to come. The share price fell by nearly 8% to 302p.

Profits nearly doubled to £226m from £118m the year before, largely on the strong performance of new acquisition Elster, which makes meters for the utilities sector and.

But the firm noted that “weakness in specific market areas may hold back growth in the short term”, with a downturn in the mining sector expected, while the pound’s strength should also be a factor.


Oil wellThe share price of oil and gas explorer Soco (LSE: SIA) fell by almost 11% to 413p following a dip in revenue and cash flow, which was largely a result of production being curtailed in Soco’s TGT field in Vietnam.

In the 12 months ended December 31 revenue amounted to $622m against $608m the year before. The firm hopes to bounce back in 2014 given the “high potential” of its portfolio.

Shareholders shouldn’t be worried by Soco’s oil activity in a world heritage site in the Democratic Republic of Congo. Even though institutional investors, including Aviva and Legal & General, view the issue as serious, they aren’t in a position to divest shareholdings.


unileverUnilever (LSE: ULVR) (NYSE: UL.US) hasn’t had the best time of it in 2013 and is currently trading down twice the market average at 2,439p. The owner of a diverse range of consumer goods, such as Dove and Surf, revealed in January that turnover was down 3% and sales slumped 11% in emerging markets.

To be honest, this is quite surprising given the current state of the market. The majority of shares are down today, and even the ones that are up only gained marginally. Wouldn’t it make sense, during a time of market volitility, that investors would flock to defensive stocks like Unilever?

Our verdict

The market doesn't always make sense, especially in the short term. Take a longer view instead, where companies such as Unilever with rich histories, dominant market positions and a steadily growing dividend could make you rich.

When the market is down it's a good time to buy some of the highest quality blue-chips at bargain prices!

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> Mark does not own shares in any company mentioned. The Motley Fool owns shares in Unilever.