In the last five years, individual FTSE 100 shares have produced vastly different returns. Some have soared while others have tanked. Here, I’m going to zoom in on the five worst performers over this period. Are there any opportunities within this group of stocks?
Share price action
Before I highlight the laggards, I need to point out two things.
First, I’m only going to focus on share price action, so the performance figures don’t include dividends. If I did include dividends, some of these stocks probably wouldn’t be on the worst performers list because income can make a big difference to a stock’s overall returns.
Second, I’m only looking at shares that are currently in the FTSE 100. Some stocks have performed so badly that they’ve been booted out of the index and are now in the FTSE 250. Examples here include Ocado and Burberry.
The worst performers
In the table below, I’ve highlighted those worst Footsie performers over the last half decade. Luckily, I only own one of them (more on this later)!
| Stock | Five-year share price performance |
| easyJet | -54% |
| Vodafone | -54% |
| Prudential | -52% |
| Persimmon | -48% |
| Schroders | -43% |
It’s an interesting mix: a budget airline operator, a telecoms company, an insurer, a housebuilder, and an asset manager.
All of these companies have faced different challenges over the last five years. easyJet was hit hard by the pandemic and is yet to recover. Persimmon has faced lower demand for its homes since interest rates have risen. Vodafone has struggled with its debt pile in a higher-rate environment (and cut its dividend). Prudential (LSE: PRU) has been hit by the economic slowdown in China. And Schroders has faced challenges as investors have shifted away from actively-managed investment funds.
In hindsight, some of these challenges were relatively easy to spot. Vodafone’s debt pile, for instance, was always a red flag. However, others were harder to predict. For example, in early 2020, no one was expecting a global pandemic to bring the airline industry to a standstill!
A takeaway here is that it’s crucial to diversify when building a portfolio. No matter how much research you do, there’s always the potential for things still to go wrong.
Opportunities today
Now, all of these stocks could potentially rebound at some point. However, the one I’m bullish on (and the one I own) is Prudential. To my mind, it has the most potential in the long run.
The reason I say this is that the insurer’s now focused on the Asian and African markets. And these have enormous potential. Across these markets, there are over 5bn people. And today, insurance and savings product penetration remains very low.
For example, in Mainland China, the percentage of the population that has life insurance is estimated to be less than 10%. Here in the UK, it’s estimated to be above 30%.
So there’s a lot of room for growth. I see Prudential as far more scalable than the other companies.
Of course, the downturn in the Chinese economy’s a problem here. This is resulting in less growth and impacting sentiment towards the stock.
How long this will last is anyone’s guess. It could continue for a while. Taking a five-to-10 year view however, I think the Chinese economy will come good. That’s why I’m hanging on to my Prudential shares.
This post was originally published on Motley Fool
