Three of the biggest fallers have been defence and engineering firm Meggitt (LSE: MGGT), motor insurer Admiral Group (LSE: ADM) and supermarket giant Tesco (LSE: TSCO) (NASDAQOTH: TSCDY.US), whose share price recently touched a ten-year low.
Every little helps
If like me you are a Tesco shareholder, you may be wondering whether the firms stock has bottomed out yet.
My view is that the risks of further falls are fairly evenly balanced: when new boss Dave Lewis takes the reins in October, I expect to see Tescos profit margins fall and perhaps a dividend cut all of which would see the shares fall close to the 200p mark, as I explained recently.
On the other hand, if Mr Lewis can regain investors confidence, the Tescos shares could perform more strongly. Overall, Im still a buyer of Tesco, but I wouldnt be surprised to see the supermarkets share price fall a little further yet.
Meggitts profit warning
Shares in Meggitt fell heavily on August 5, after the firm warned that full-year revenues would fall below expectations, due mainly to weak military sales.
However, it wasnt all bad: the firms interim dividend was hiked by 8% and its order backlog rose slightly to 782.7m, maintaining its 1.1 book-to-bill ratio, which means it is booking new sales faster than it is billing for completed orders a good sign of a growing business.
Overall, Im positive about Meggitt, but with a 2014 forecast P/E of around 14, I dont think the firms shares are cheap enough to compensate for the real risk of another profit warning later this year. In my view, Meggitt is one for the watch list.
However, the shine has come off Admirals shares recently, as falling car insurance premiums have led to a 9% fall in first-half revenues and caused the firm to miss market forecasts for its first-half profits.
Admiral is on my sell list at the moment, because I fear that the firms bumper prospective yield of more than 7% could be cut dramatically if price pressure continues shareholders should remember that Admirals ordinary dividend yield is just 3.5%.
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Roland Headowns shares in Tesco. The Motley Fool UK owns shares of Tesco. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.