3 FTSE 100 Shares Crashing to New Lows
Jan 10th 2013 2:09PM
Updated Jan 10th 2013 3:35PM
LONDON -- The FTSE 100 is still hovering around record territory, having put on a few more points today to reach 6,102. This comes on a day when the Bank of England kept U.K. interest rates unchanged at 0.5% and chose not to extend its quantitative-easing stimulus package, which has so far pumped 375 billion pounds into the financial system.
In bullish times like these, there are far fewer losers than winners, but there are always some companies struggling. Here are three whose shares are plumbing new depths.
Wm. Morrison has had a bad year as the supermarket chain's shares continue to be trounced by those of its rivals. While Tesco shares have been rising on a Christmas performance much stronger than last year's, and J Sainsbury is up about 10% on the year despite recent drops, Morrison shares have just kept on falling.
And they hit a new low of 251 pence today, taking them down more than 15% over the past 12 months, despite a minor rally to September. Forecasts put the shares on a price-to-earnings ratio of less than 10 with a dividend yield of 4.6% expected, although City analysts seem to see that as a reason to sell the shares.
Shares in high-street baker Greggs have had a lousy year as well, falling 15% to reach a new 52-week low of 442 pence today, although they perked up toward the end of the session to come back to 453 pence. A trading update yesterday told of a weak Christmas period, with like-for-like sales falling 2.9% in the five weeks to Jan. 5. Although full-year sales rose by 4.8%, on a like-for-like basis, that translated to a 2.7% fall.
But there's still a well-covered dividend yield expected, and it's looking like it'll be around 4.5% for 2012, with raises forecast for the next two years. And the share price fall has brought it back down to what might prove only a modest undervaluation, with forecasts suggesting a P/E of about 11.
If you're looking for a cheap diamond-miner, then Gem Diamonds might be worth a look. At least, the shares are a lot cheaper than they used to be, having fallen from a 2012 peak of 311 pence to just 4 pence above their 52-week low of 142 pence.
But digging a bit deeper reveals a more complicated picture, with tough market conditions leading to expectations of a big drop in earnings for 2012. And even though a strong recovery is currently forecast for 2013, that still puts the shares on a forward P/E of 12.5, which doesn't look like a screaming bargain for such an unpredictable business. Are the shares worth buying? That's up to you to decide.
Finally, how does Britain's ace investor Neil Woodford avoid share price falls? He goes for a strategy of buying solid blue-chip shares paying dependable long-term dividends. And in doing so, he has built a record of beating the FTSE for nine straight years. If you want to see how Woodford manages to beat the market, the free Motley Fool report "8 Shares Held By Britain's Super Investor" takes a look at some of his key holdings. To get your copy, click here while it's still available.
The article 3 FTSE 100 Shares Crashing to New Lows originally appeared on Fool.com.Alan does not own any shares mentioned in this article. The Motley Fool owns shares in Tesco. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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