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The laggard blue-chip stocks of 2014

Yesterday, I highlighted which of Australia’s largest companies have led the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) for the first quarter of 2014. So far, it has been quite a different story to the one that played out last year whereby the major banks and other companies like Telstra Corporation Ltd (ASX: TLS) pushed the bourse more than 7% higher in just three months as investors sought out the highest yielding stocks.

This year, the index has actually fallen by 0.5% while Westpac Banking Corp (ASX: WBC) is the only company from last year’s dominant group featured in this year’s top five with a gain of 6%. Telstra narrowly avoided the list of laggards found below, having fallen 4.4%, making it the sixth worst performing member of the ASX 20 so far this year.

  1. BHP Billiton Limited (ASX: BHP)
    Investors and analysts had high hopes for the mining heavyweight entering into 2014, expecting the company to be amongst the best performers. It goes to show that analysts’ predictions can only ever be taken with a grain of salt with the miner having lost 5.6% so far thanks to plunging iron ore and copper prices.
  2. Wesfarmers Ltd (ASX: WES)
    Unlike its primary competitor Woolworths Limited (ASX: WOW), which has risen 5.7%, Wesfarmers is at the other end of the spectrum having lost 6.1%. On a P/E ratio basis, Wesfarmers is still more expensive at 20.3 times earnings while Woolworths is trading at 18.5 times.
  3. Insurance Australia Group Limited (ASX: IAG)
    The Insurance group was recently admitted to the ASX 20 group at the expense of Newcrest Mining Limited (ASX: NCM). While there doesn’t appear to have been any company specific news which would account for the fall, the stock has still fallen just over 7% for the year to date.
  4. Rio Tinto Limited (ASX: RIO)
    Rio Tinto is in the same boat as BHP. While its prospects had investors excited going into the year, a sharp plunge in the value of iron ore has seen its shares fall 8%.
  5. Santos Limited (ASX: STO)
    The energy producer has been the worst performing company from the ASX 20 for the year with shares having fallen 9.5%. The company released a rather disappointing full-year earnings report which has impacted the performance of its shares.

Foolish takeaway

Although these companies performances are disappointing for current shareholders, it can also be seen as an opportunity to stock up on quality businesses at discounted prices. While Telstra’s fall is one to take advantage of, it might be wise to wait for BHP’s and Wesfarmers’ shares to fall a little lower before buying.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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