While some companies have enjoyed a cracking start to the calendar year – such as TPG Telecom Ltd (ASX: TPM) which is up 19% already – there are also a number of companies which have fared very poorly and are down significantly. All of this is within the context of the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) which has produced a completely flat return over the quarter.
Three companies which are squarely in the underperforming list this quarter are Treasury Wine Estates Ltd (ASX: TWE), Southern Cross Media Group Ltd (ASX: SXL) and Pacific Brands Limited (ASX: PBG). The share price movements of these three stocks since 1 January have been falls of 24.5%, 21.6% and 17.2% respectively.
All three companies own and manage brands which resonate with consumers; they also produce goods and services which remain in demand by their respective customers. Treasury Wine owns popular wine labels, many with global export appeal such as Penfolds. Southern Cross owns the Triple M radio network and operates Fox FM Melbourne which is Australia’s most listened to radio station. The continued strength of radio broadcasting and of Southern Cross’ line-up in particular, is apparent from the group’s underlying growth (all be it small) in revenue and profit. Finally Pacific Brands own and also hold licenses for a portfolio of highly recognised and sought after apparel, footwear and bedding products including Bonds, Berlei and Sheridan.
While each of these three companies face certain headwinds, hence the poor share price performances, the underlying brands and market positioning of each would appear sound. Importantly not only should these firms be able to roughly maintain market share, but they aren’t operating in industries that are in structural decline which should give investors’ confidence that better times could lie ahead for these three big name stocks.