With the FTSE 100 down a brutal 9% this year, plenty of big-name stocks have taken a pasting. Some have done evenworse than the index and here are three of the worst performers. Should you grabem while theyre cheap?
Aberdeeen Anguish
Aberdeen Asset Management (LSE: ADN) built its reputation on its emerging market funds and islosing it for the same reason. Anybody can make money in a rising market but Aberdeen has been losing it hand over fist in a falling one, as investors flee China and Asia. Money hasbeen flowing out of itsfund range and the stock isdown33% over the last six months.
Investors are an ungrateful lot, soonforgetting the fact that Aberdeens dividend per share growth has compounded at a generous 20% for the last decade. You can buy the stocktoday atless than 10 times earning and pocket a healthy yield of more than 5.46%, although that could come under pressure if emerging markets fallfurther.
Aberdeens strong balance sheet, disciplined cost management and takeover potential makes it a tempting buy. But with US Federal Reserve hawks talking upa 2015 rate hike again, which would inflict further damage on indebted emerging markets, now may be too earlyto buy. Justdont leave it too late.
Hold On Tight
No prizes for guessing why HSBC Holdings (LSE: HSBA) is in the doghouse, given that it earns 78% of its pre-tax profits in China and Asia. Perhaps investorsshould be grateful that its share price is down just 25% over the past 12 months. It could have been worse. Just look at troubled Standard Chartered, down 44%.
Goldman Sachs recently rated it a buy due to its strong capital position and says it will benefit from rising US interest rates. That will liftnet interest marginsasloans tied to the Feds target rate will automatically rise butHSBCs savings rates will creep up at a slower pace. Banks love to play these tricks with savers and soon it will be game on again.
HSBC group chairman Douglas Flint is bracing himself for a repeat of ChinasBlack Monday stock market crash, so maybe keep your ammunition dryfor another buying opportunity. Yet at 11 times earnings and yielding 6.38%, the price is already right for long-term investors.
Unsure Of Shell
China also has its fingerprints all over the last years 36% share price collapse at Royal Dutch Shell (LSE: RDSB), as its slowdownis partly to blame for the plunging oil price. Yet there are now signs that oil could turn, with US crude inventories falling for the second consecutive week and Brent crude edging towards $50 a barrel again.
The Saudi strategy of washingaway US shaleon a flood of cheap oil may finally be paying off, as drillers see their credit lines shrink as banks revalue their decreasing reserves. Investment is down on lower prices and business is getting tougher, although further signs of slowing global demand could put a cap on any revival in the short term.
Trading at just 7.95 times earnings and yielding 7.52%, Shell is now in bargain basement territory. If oil stays low that yield will eventually have to be cut, but managementwill fight tooth and nail before that happens. When oil rises, surely, so will Shell.
You might want to wait before buying these three stocks to see if markets fallfurther, but don’t leave it too late or the opportunity may be gone.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended Aberdeen Asset Management and HSBC 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.