The FTSE 100 has had a positive start to 2022. The index is up over 130 points (+1.8%) this year. Meanwhile, other markets have fallen back. The S&P 500 has lost 5.8% in 2022. The tech-dominated Nasdaq Composite has dived by 10.4%, moving into correction territory. One possible reason for the FTSE 100’s recent outperformance is that its constituent shares are cheap in historical and geographical context. But cheap shares can sometimes get even cheaper.
The FTSE 100’s winners and losers over one month
In the past month, the FTSE 100 has gained 0.1%. As you’d expect, some Footsie shares have performed much better than others. Over one month, 33 of 100 Footsie shares have gained in value. These gains range from 19.9% to 0.1%, with the average rise being 2.7%.
At the other end of the scale lie 67 FTSE 100 stocks that have lost value over one month. These losses range from 0.1% to 26.9%. The average decline across all 67 losers is 9.1%. But 23 FTSE 100 shares have dipped by double-digit percentages in the past 30 days.
Top of the FTSE 100 flops
For the record, these are the FTSE 100’s three biggest fallers in the past month. Each of these slumping stocks has lost more than a fifth of its value in 30 days:
|Croda International||Speciality chemicals||-21.2%|
As you can see, losses at these Footsie flops range from over 21% at Croda International to almost 27% at Fresnillo. The average decline across all three slumpers is 23.5%. Yikes.
For me, one of these flops is too cheap
I don’t own shares in Fresnillo (LSE: FRES), but this FTSE 100 stock is now firmly on my radar. After steep falls since September 2020, Fresnillo’s share price has more than halved. And these kind of hefty declines often plunge unloved or unwanted stocks into Mr Market’s bargain basement. But does this de-rating really reflect the underlying performance of the business? Or have the shares been overlooked?
Fresnillo has been London-listed since 2008. However, the group is based in Mexico City and also quoted on the Mexican Stock Exchange. Fresnillo’s claim to fame is being the world’s largest producer of primary silver (silver from ore), as well as Mexico’s second-largest gold miner. In fact, its oldest mine has been in operation for nearly five centuries. Today, Fresnillo manages seven operating mines, three development projects, and six exploration prospects. In 2020, this FTSE 100 firm produced 53.1m ounces of silver and nearly 770,000 ounces of gold. Wow.
I’d buy Fresnillo today
As you’d probably guess, Fresnillo’s financial fortunes are strongly tied to the prices of silver and gold. As I write, gold trades at around $1,803.60 an ounce, down 1.1% over one year. Likewise, silver is priced at $22.51 an ounce, diving 17.6% in the past 12 months. Of course, these price declines have depressed Fresnillo’s cash flow, profits, and earnings. From its 52-week high of 1,193.5p on 1 February 2021, this FTSE 100 stock plunged to a low of 612.6p on Monday, 31 January.
As I write, Fresnillo shares trade at 626p, valuing the business at £4.6bn. This stock trades on a modest price-to-earnings ratio of 10.2 and a solid earnings yield of 9.8%. The dividend yield of 3.8% a year is slightly below the FTSE 100’s 4%. To me, these fundamentals seems too cheap, so I’d buy Fresnillo stock today. But I’d fully expect this Footsie share to ride the roller-coaster of volatility in 2022-23!