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the dogs of the FTSE 250 is a phrase used to describe the worst performing stocks over a certain period of time. Taking a look at companies that have underperformed in the short term can give me potential buying opportunities if the stock rebounds again in the long term. Here are my thoughts on the names on the UK index list.
Fighting the impact of war
I'm going to filter by the worst performing names over the last month. The wooden spoon goes to Ferrexpo (LSE:FXPO), and the share price has fallen 38% in the last four weeks. Over the past year, this loss has increased to 59%, showing that it has been declining for some time.
The business has been greatly affected by the war in Ukraine. At last count, 754 employees serve in the Ukrainian armed forces. The discontinuation of the iron ore pellet facilities means that of the four sites, only two are operational.
Naturally, this weighs on the company. Total commercial production for the third quarter of 2023 decreased by 50% compared to the same quarter of the previous year. With production and revenue down, I'm not surprised the stock price is also falling.
It is a sad situation for the company. Poor performance is due to external factors beyond the control of the management team. However, I don't see things changing at least until there is some solution to the war. On that basis, I simply cannot justify the purchase at this time.
China's weak demand hurts
The second worst performance is Gender (LSE:GNS). The biotechnology company focuses on improving animal genetics. Over the past month, the stock is down 16% and 39% over the past year.
The company had been on track for weak results in 2023 throughout the year. He noted that the weaker performance of the Chinese economy hurts business. This proved correct with the release of full-year results last month. Pre-tax profit was down 31% year-over-year, with weak demand from China to blame.
However, when I take a step back, I think this could be a smart buy now. North America, Latin America and Europe generated strong growth in the company's operating profit. So it's clear that Genus has the right business model. With several economists expecting the Chinese economy to recover in 2024, this area could recover as well.
Genre is also pretty unique in what it does. Therefore, I don't see competition being a big threat in the future. I'm not saying that the company is a monopoly, but it has strength thanks to its position in the market.
Therefore, of the two dogs in the FTSE 250 at the moment, I would stay away from Ferrexpo but consider buying some Genus shares when I have free funds.
