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After a brilliant start to the week, FTSE 100 Stocks took a bit of a beating on Thursday and Friday. This followed worrying news about two midsize Californian banks teetering on the brink of bankruptcy.
share slide
As a result of this latest bout of investor jitters, the FTSE 100 is down 2.5% this week. Of course, some stocks outsold others in this latest market crash. Here are two that took a hit harder than most this week.
Faller #1: Ocado Group
the worst actor was Ocado Group (LSE: OCDO). Shares of the online supermarket and logistics technology provider plunged 14.3% in five trading days, ending the week at 451.1 pence.
This latest steep drop sees Ocado shares drop 61.9% over the past year. Oh! Furthermore, this unique growth wonder stock has lost 21.8% of its value in the last five years.
On the other hand, Ocado shares are still well above their 52-week low of 380.3 pence, hit on October 13 last year. But they are also well, far below their 52-week high of 1,316.5 pence, hit exactly one year ago.
Today, this company is valued at just £3.7bn, pushing it into the relegation zone of the FTSE 100 to be downgraded in the next quarterly reshuffle. And in 23 years of trading, Ocado has burned through £1.5bn of cash and yet remains barely profitable.
I do not own Ocado shares, and it is for the above two reasons that I will not catch this ‘falling knife’ by buying these shares.
However, he could very well be wrong and Ocado’s stock could stage another comeback, especially if he continues to sign large licensing deals with supermarket chains abroad. However, this volatile reserve is too rich for my blood.
Faller #2: Barclays
barclays (LSE: BARC) was the fourth biggest drop for the FTSE 100 this week, falling 8.3% to close at 157.42 pence. This values Blue Eagle bank at around £25bn, making it a FTSE 100 stalwart.
This drop sends shares of the Big Four bank down 0.2% over the past year. Meanwhile, the stock has lost 25.9% of its value in the last five years.
For the record, I’m as bullish on Barclays as I am bearish on Ocado. This is because I view this FTSE 100 stock as a classic stock/dividend/recovery play for me as a patient long-term investor.
Right now, Barclays is trading with a price-earnings ratio of 5.3 and an earnings yield of 18.9%. To me, these figures suggest that these shares have been dumped on the FTSE 100 bidding bag. Perhaps investors expect Barclays earnings to fall this year if the UK enters a prolonged recession?
Additionally, this bank stock offers an above-market dividend yield of 4.6% per annum, versus less than 4% for the broader Footsie. Even better, this cash return is covered 4.1 times by final earnings. To me, this suggests that the Barclays dividend is rock solid and has room to grow.
On the other hand, bank stocks tend to underperform during recessions due to increased credit losses. Still, I would buy this FTSE 100 share today, if I didn’t already have it!
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