With some shares down by over two thirds in the last 12 months, investing in the FTSE 100 has been difficult for many investors. Especially those with a value focus. However, other shares have done well despite the pandemic.
A top FTSE 100 share that might be overpriced
One such share is Ocado Group (LSE: OCDO). Investors have bought in to the international potential of its technology. This has aligned well with more online deliveries from supermarkets during the height of the pandemic. And it’s a trend many expect to see continue.
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Although unlike many other technology companies, Ocado doesn’t have an asset-light business model. It’s pouring huge amounts of capital into building warehouses for its customers.
As well as this, the business is being sued by AutoStore over tech patents and this could hold the share price back in the coming months, depending on how that develops. If Ocado gets dragged into a high-profile damaging lawsuit, investors might well become more cautious on the stock than they have been in the last 12 months.
Ocado is a share that divides opinion. And while I wouldn’t bet against the shares, I’m not keen to invest. It’s not a hidden gem and it seems overpriced versus what it’s delivering.
A FTSE 100 share that has accelerated this year
Scottish Mortgage (LSE: SMT) is an investment trust, run by Baillie Gifford, which has been a strong backer of Tesla. This has powered its performance, especially over the last year.
With the tech-heavy NASDAQ now faltering a bit compared to the first nine months of 2020, now might not be the best time to pile into the shares. Particularly if the logic behind doing so is to invest in shares which have momentum.
Scottish Mortgage may well continue to outperform UK-focused, or income-focused funds and trusts. That said, it doesn’t seem to me like a clear buy at the moment. The shares have grown strongly and now appear to be risky compared to other FTSE 100 shares.
The top-performing share that might have more legs
The share price of gold and silver miner Fresnillo (LSE: FRES) has been boosted by the rising prices of the precious metals. This has been a reaction to the global uncertainties caused by the pandemic.
Although I’m not an expert on precious metal prices, if markets remain volatile, they could remain a safe haven for investors. So there are reasons to think miners could keep doing well, possibly for the rest of this year and into 2021.
For me, Fresnillo could be the one high-performing share from this list to buy. As Peter Stephens recently pointed out, it offers good value as the price-to-earnings growth ratio (a favourite metric of a growth investor like Jim Slater) is only 0.2. Anything under 0.7 is considered to be cheap. This is why I think there could be more legs left in the growth of the share price.
These top-performing FTSE 100 shares have had a good run. I think investors are aware of this and the share prices now look expensive.