It’s been a torrid period for the retail and technology sectors this year, while money has poured out of emerging markets and a banking scandal is never far from the headlines.
These are the five worst performers in the FTSE 100 since January (source: Capital IQ):
Morrisons
The share price of Morrisons (LSE: MRW) has failed to reward investors in 2014, falling by a mighty 31%, and the Bradford based grocer is now investing £1bn over the next three years to win back customers. Morrisons, despite its excellent reputation for fresh produce, is playing catch-up in a competitive market: the supermarket chain only started selling online in January. Investors, no doubt frustrated by the share price performance, may receive a prospective 7% income if they choose to hope for a recovery to bear fruit.
Coca-Cola HBC
Coca-Cola HBC (LSE: CCH) is one of the world’s largest bottlers of Coca-Cola products, selling 11 billion litres of the famous soft drink each year, with significant growth prospects in emerging markets. Shares of Coca-Cola HBC are trading at a 24% discount year-to-date, albeit there’s a risk for investors that as consumers continue to become more health conscious, demand for the sugary drink could weaken.
Barclays
Who’d buy a bank in 2014? The sector is cheap, but fraught with uncertainty. Barclays (LSE: BARC), which is down 21% this year, was on a mission to rebuild trust in the wake of Libor. Then — as if anyone believed in the platitudes — Barclays was slapped with a fine for attempting to fix the gold price. Just last week £2.5bn was wiped off the value of the company after a lawsuit was brought against the embattled bank. The lawsuit alleges Barclays defrauded investors who used its private trading venue and more fines might be heading down the slipway.
ARM Holdings
Investor sentiment has turned against technology companies with stratospheric earnings multiples, like microchip designer Arm Holdings (LSE: ARM), which is on a P/E of 80. Arm’s shares have fallen 18% in a fearful climate, but outlook for the second half is positive, with royalty revenues expected to bounce back after a disappointing first quarter.
Vodafone
Vodafone’s (LSE: VOD) core earnings fell 7.4% to £12.8bn for the year ended 31 March 2014. Despite the pressure on earnings, the board is committed to raising the dividend annually, and a strategy is in place for long-term growth. Vodafone acquired the Spanish cable operator Ono for £6bn as the company seeks to become a “more unified provider” — selling broadband, television and fixed-line services — to take advantage of increasing demand, particularly in continental Europe, for such a bundled product. Adjusted for the share split Vodafone has tumbled 17% this year.