Will BT Group plc (-10%), Prudential plc (-18%) and Associated British Foods plc (-13%) keep on falling?
Since the turn of the year, shares in ABF(LSE: ABF) have fallen by around 13%. Clearly, this is a disappointing result for the company's investors and it means that ABF has underperformed the FTSE 100 by 12% year-to-date. This is despite ABF's Primark business moving from strength-to-strength as it becomes ABF's key division.
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Although Primark is performing well, ABF's performance as a business is set to be somewhat lacklustre in the current year. In fact, ABF is forecast to post a rise in its earnings of just 1% this year, which may be a reason for the weakening of investor sentiment since the turn of the year. And with the UK retail industry likely to endure an uncertain near-term future as interest rate rises come ever closer, even ABF's Primark division may struggle to post upbeat growth numbers.
However, with ABF forecast to record double-digit growth in the 2017 financial year, it trades on a price-to-earnings growth (PEG) ratio of only 1.4. As such, it may be worth buying for the long term, but its share price may come under further pressure as this year's modest growth causes investor sentiment to wane.
Opportunity knocks
Also recording a falling share price in 2016 has been Prudential(LSE: PRU), with the diversified financial services provider seeing its share price slump by 18%. This could present a superb opportunity to buy a slice of the business for the long haul as Prudential is in good shape due to its high degree of exposure to the emerging world. This could act as a positive catalyst on its share price and with it trading on a price-to-earnings (P/E) ratio of just 10.7, there's clear upward rerating potential.
One of the key differentiators between Prudential and a number of its financial services peers is its diversity. It has a successful insurance business, fund management operation and also operates a number of other financial product lines that could allow it to deliver more resilient growth figures than is the case for most of its sector peers. With uncertainty among investors likely to be high in the coming months, Prudential's diversity and wide margin of safety could prove to be major allies for investors.
Wait and see?
Meanwhile, BT's(LSE: BT-A) share price has also declined in 2016, with the quad-play operator recording a fall in its valuation of around 10%. This is somewhat surprising since BT is performing well as a company, with it winning over large numbers of customers to its superfast broadband and pay-TV offerings, while the integration of EE seems to be progressing well.
However, investor sentiment may have declined due to the risks faced by BT. For example, the quad-play space is becoming increasingly competitive and margins may come under pressure, while rapidly changing the product offering and business model of any company can cause delays and disappointment in the short run. Furthermore, with BT having significant debt and a large pension liability, its balance sheet remains less sound than a number of its index peers.
As such, and while BT could prove to be a strong long-term buy, it may be worth watching rather than buying at the present time.
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Peter Stephens owns shares of Prudential. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
