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2015’s bottom 10 large-cap stocks look like bargains: Is it time to buy?

2015 has been extremely kind to investors in Australia’s large cap stocks… unless you invested in resources companies.

There are only a handful of large companies that have delivered a negative in the first three-and-a-half months of the year, let us hope it continues and resources companies recover some of their lost ground.

Unsurprisingly then, the 10 worst-performing large cap companies on the ASX so far in 2015 are:

  1. Fortescue Metals Group Limited (ASX: FMG)- down 33%
  2. Leighton Holdings Limited (ASX: LEI)- down 9%
  3. Woodside Petroleum Limited (ASX: WPL)- down 7%
  4. Santos Ltd (ASX: STO)- down 7%
  5. Rio Tinto Limited (ASX: RIO)- down 5%
  6. Woolworths Limited (ASX: WOW)- down 5%
  7. Insurance Australia Group Ltd (ASX: IAG)- down 3%
  8. SEEK Limited (ASX: SEK)- down 3%
  9. Bendigo and Adelaide Bank Ltd (ASX: BEN)- down 2%
  10. Spark New Zealand Ltd (ASX: SPK)- down 2%

Is it time to buy?

The numbers in isolation aren’t THAT bad (with the exception of Fortescue), however when they’re compared to the 9.8% rise in the S&P/ASX 200 (INDEXASX: XJO) it paints a grim picture for the rest of 2015.

Here are some key takeaways from the list:

  1. A fall in the price of commodities will hit the share price of those companies that mine commodities out of the ground (FMG, WPL, STO, RIO)
  2. Failure to deliver on expected earnings growth (WOW, BEN), or failure to grow dividends when expected (IAG) will see a company’s share price tumble.
  3. A strong previous year can sometimes result in a hangover if growth meets market expectations or nothing spectacular happens (LEI, SEK, SPK).

Personally, I can’t see many of these companies being great investments over the short to medium term. Perhaps over the long term, if commodities prices recover, some of the more dominant companies could turn into big dividend generators or growth engines once again.

One for the Watchlist!

There is one company in the list above that has all the attributes of a great company. It’s had a poor 2015 only because it has more than doubled in the last two years.

It has an online portal in Australia, eclipsing all rivals and also has minority shareholdings in online portals in some of the world’s fastest growing online job markets.

These are the kind of companies that we at the Motley Fool love to invest in!

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Motley Fool contributor Andrew Mudie owns shares in Fortescue. You can find Andrew on Twitter @andrewmudie

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policyThis article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.”

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