3 Shares The FTSE Should Beat Today

Published in Investing on 16 November 2012

Melrose (LSE: MRO) and Lavendon (LSE: LVD) suffer on declining prospects.

The FTSE 100 (UKX) is still on the way down today, dropping 24 points to 5,654 at the time of writing. The fall is mostly down to the gloomy news coming from Europe of recession, but one thing we have learned in recent years is that the best time to buy shares is when they're down.

Of course, individual company shares often fall for very good reasons. Here are three that are sliding and look set to lag the FTSE today:

Melrose

Melrose (LSE: MRO) shares crashed this morning, losing 27p (11%) to 209p, after the firm warned of an uncertain outlook for 2013. The FTSE 100 engineering group told us of a slowdown in sales and a weakening order intake, particularly within its energy businesses.

Melrose, which buys underperforming small companies with a view to turning them round and selling them, is still expecting its performance this year to meet expectations, but analysts will now surely be rushing to downgrade their 2013 forecasts.

Lavendon

Lavendon (LSE: LVD) slumped 11p (8%) to 127p after owning up to a weaker third quarter. Although the group's full-year performance should be in line with expectations, trading activity within some of the firm's key divisions appears to be suffering from the current hard economic times.

If this is a short-term blip, we could be looking at an oversold share price now. The latest price puts the shares on a price to earnings (P/E) ratio of only a little over 10.

Ultra Electronics

Ultra Electronics (LSE: ULE) lost 41p (3%) to 1,488p after the defence contractor issued a profit warning and announced the departure of finance director Paul Dean. Due to "adverse market conditions in the defence sector", the full-year performance is now expected to be only in line with 2011 figures.

Prior to today, City analysts had been forecasting pre-tax profits of around £110m. But with 2011's figures coming in at just £91m, the downgrades are going to be  quite large.

Finally, how does Britain's ace investor Neil Woodford avoid share price falls? He goes for a strategy of buying solid blue-chip shares paying dependable long-term dividends. And in doing so, he's built a record of beating the FTSE for nine straight years.

If you want to see how Mr Woodford manages to beat the market, the free Motley Fool report "8 Shares Held By Britain's Super Investor" takes a look at some of his key holdings. To get your copy, click here while it's still available.

> Alan Oscroft does not own any shares mentioned in this article.

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