October is on track to be the worst stock market month for almost a year, with the FTSE 100 falling over 3% and its mid-cap sibling tumbling 6%.
It’s not just been London shares enduring losses, with New York’s Nasdaq sliding 3.2%, Germany’s DAX down 4.1% and the Hang Seng down 2.75%.
These times often interest contrarians who follow such stock market maxims as Warren Buffet’s advice to “be fearful when others are greedy and to be greedy only when others are fearful” or his mentor Benjamin Graham’s that price fluctuations provide investors “with an opportunity to buy wisely when prices fall sharply”.
Moreover, if analysts and fund managers are right in saying that UK stocks are undervalued, it could prove an enlightening exercise to see which companies have fallen the most.
October’s biggest fallers in the FTSE 350
- Cab Payments -74%
- Ceres Power-37%
- Rentokil Initial -32%
- Spirent Communications -30%
- Mobico Group -30%
- CLS Holdings PLC -27%
- Energean PLC -26%
- NatWest Group -24%
- Aston Martin Lagonda Global Holdings -23%
- Ocado -23%
- St James's Place PLC -23%
- Vistry Group PLC -23%
- Wizz Air Holding PLC -20%
- Genuit Group PLC -19%
- Marshalls PLC 19%
CAB Payments Holdings PLC (LSE:CABP) clearly attracted some value seekers after is giant profit warning during the month send its shares crashing 80%.
Having only come to market in July at an £851 million valuation with its IPO priced at 335p, the cross-border payments and foreign exchange provider found itself with a valuation nearer £160 million after it said that trading volumes and profit margins were being reduced in key African currencies.
The shares eventually sank to below 50p, but with the company’s statement coming just ahead of a warning from European rival Worldline that sent further shockwaves around the fintech sector, bargain-hunting investors have carried CAB shares back up above 60p.
Broker Liberum said the board’s reputation was “in tatters” and it slashed its share price target to 100p, benchmarking valuation against UK banks not European payment names.
“Underlying, we still believe there is a good business but absent further clarity, the stock will mark time.”
Elsewhere in the financial sector, ongoing regulatory examinations hit NatWest Group PLC and St James's Place PLC.
But while NatWest delivered earnings that were a major disappointment, once SJP confirmed that talks with regulars had led it to tweak its fee structures, several analysts popped up to say it could be a good thing.
SJP shares now look “cheap” said UBS, with lower earnings, fee pressure and uncertainty about the new charging structure already appear priced in, in the analyst’s opinion.
In a very different case, October has seen Ceres Power Holdings PLC (LSE:CWR, OTC:CPWHF) suffer from a quieter month following interim results published at the end of the prior month that saw losses little changed as it continues to invest in its well-regarded solid-oxide technology and continues endure annoying delays to the signing of joint ventures with Bosch and Weichai into 2024.
Broker Liberum, which has an 800p target price versus the 198.6p current shares, noted that there was accelerating momentum in the development of Ceres electrolysis business, which is now thought likely to be larger than the fuel cell business – “a scenario that in our view is not fully priced into consensus valuation”.
Similarly, there has been little direct news about Aston Martin, meanwhile, but the shares have skidded lower ahead of a third-quarter update on 1 November, even though M&A speculation rumbled.
Worries about partner delays also hit Ocado Group PLC, where the shares, after notching a 15-month high in the summer saw downward momentum hastened by the decision of a retailer client in Sweden to shut down one of its e-commerce warehouses, a move which analysts at Barclays cautioned could dampen sentiment, with a risk that wider existing customer roll-out plans could be delayed too.
Profit warnings also put heavy dents in the shares of Spirent Communications and Mobico Group PLC, the company formerly known as National Express.
The former, a supplier of testing and assurance to the telecoms sector, said revenues were likely to continue being depressed as they were in the first half, while the latter cited higher costs as a result of investment.
Royal ratcatcher Rentokil Initial PLC shares plunged from recent all-time highs recent after it warned on profits due to softer trading in North America and “near-term market uncertainty”, diving to lows not seen since lockdown-affected 2020.
This of course has of course tempted some investors back in. Barclays is a fan, flagging its 700p price target, stating that there is “not sufficient evidence to affect our view” that there is a quality transatlantic business emerging, and that the share price fall is an opportunity for those who 'missed out' on Rentokil's earlier share price gains.
Housebuilder Vistry Group PLC has also subsided to three-year lows as it expects slower sales to hit profits, having not seen a seasonal upturn in business that it had expected.
Analysts said the softening of the profit guidance and additional charges resulting from a change of strategy were unhelpful for management as they try to build confidence in their new direction.
Tough times in the housing market has also been reflected in tough conditions for Marshalls PLC, the manufacturer of natural stone and other landscaping products.
In an update during the month, it said sales were down and downsizing efforts announced in the summer had concluded but it still sees scope for more cuts.
Such stories saw investors read-across to similar pain for plastic pipe-maker Genuit Group PLC, formerly known as Polypipe, even though it put out no news of its own.
The Israel-Palestine conflict has added a new challenge for Wizz Air Holdings PLC on top of its uncertainties from problems with engines from a major supplier, but some reckon that Western European travellers have been sanguine about conflicts in the past so any softening of demand may only be transitory.