This FTSE 100 stock has crashed over 20%! I think it’s a screaming buy

A quality FTSE 100 (INDEXFTSE:UKX) stock has tumbled in value. This Fool is considering backing up the truck.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

While the FTSE 100 has largely held its own, individual share prices of some of the UK’s biggest companies have crashed since the beginning of 2022.

I’m delighted! Let me explain why.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

Opportunity knocks

One of the great things about being a Foolish investor is that I can take a long-term view of stocks. I don’t need to worry too much about, say, the latest scandal at Downing Street, or a possible military conflict in Eastern Europe. That’s because I’m looking to grow my wealth slowly but surely over the years. Today’s headlines are tomorrow’s fish and chips wrapper.

Nor do I need to fixate on the quarterly or annual performance of my portfolio. Knowing the equities have consistently shown themselves to be the most lucrative asset I can own over decades is enough. 

Contrast this attitude with that of the typical professional investor. They know that underperforming a benchmark (the FTSE 100 in many cases) for too long could put their job at risk. As a result, they can be forced to move out of underperforming stocks, regardless of their overall quality.

One example of this, in my opinion, is health & safety equipment maker Halma (LSE: HLMA). As I type, its shares are down 22% in 2022. This looks like a great buying opportunity to me.

Quality FTSE 100 stock

I certainly don’t think there can be any doubt over whether Halma is a good company. For years now, the business has been steadily growing revenue and profits. And given no client wants to be seen to be compromising the safety of its employees, or bypassing regulations, I have no doubt this will continue for many years to come. 

Halma is also in a strong financial position. Having barely any debt on its books should mean that the £9bn-cap can continue acquiring smaller enterprises and throwing cash at research & development. 

While perhaps of less importance for the committed growth investor, it’s also worth pointing out that Halma’s history of increasing its dividends is second to none.

Although cash payouts are never guaranteed, I don’t know of many other FTSE 100 stocks that have increased their cash payouts by 5% or more in 42 consecutive years. Considering just how many challenges the UK stock market has faced over this period, that’s got to count for a lot.

Time to buy?

Despite falling so far, Halma’s shares still change hands for 38 times forecast FY22 earnings. That’s a rich valuation in anyone’s book. It is however, significantly lower than when I last looked at the company in November 2021. Back then, this FTSE 100 member’s P/E stood at nearly 50!

The fact that I was a prospective buyer even back then shows how highly I regard this business. Now that things have fallen back despite no negative news being released, I think it could be time for me to back up the truck.

Of course, the shares could get even cheaper as we progress through 2022 if the rotation into value stocks continues. Indeed, this is why holding a diversified portfolio of stocks remains vital. 

But quality stocks are rarely without friends for long. If ever there was a FTSE 100 firm where a 20% drop in its share price should be celebrated by long-term investors like me, it’s this one. 

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Halma. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Should you invest the value of your investment may rise or fall and your Capital is at Risk. Before investing your individual circumstances should be considered, so you should consider taking independent financial advice.

More on Investing Articles

Portrait of construction engineers working on building site together
Investing Articles

Is this FTSE 100 stock the best housebuilder to invest in?

One FTSE 100 housebuilding stock has outperformed all of its industry peers by a big margin this year. Should I…

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

2 cheap dividend growth stocks I’d buy as the economy sinks

I'm searching for the best bargains to buy following recent market volatility. Here are two top dividend growth stocks I…

Read more »

estate agent welcoming a couple to house viewing
Investing Articles

Here’s 1 FTSE stock primed to benefit from the current housing market!

With the current housing market as it is, Jabran Khan explores a related FTSE stock that could provide stable and…

Read more »

Portrait of construction engineers working on building site together
Investing Articles

Here’s why this AIM-listed stock could be one of the best shares to buy!

This Fool is looking for the best shares to buy. Despite macroeconomic issues, this stock could be a great long-term…

Read more »

Elderly father and adult son work in the garden
Investing Articles

This penny stock could be set to soar! Should I buy shares?

This Fool looks closely at a penny stock operating in an exciting growth market that could see its shares rise…

Read more »

Illustration of bull and bear
Investing Articles

The next stock market recovery looks imminent

As the stock market bear gives way to the bull, some stocks are already turning up and I'm ready to…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

2 dividend shares to protect me from soaring inflation

Dividend shares can be an excellent way to keep up with inflation. Our writer explores several options to protect his…

Read more »

Middle-aged white man pulling an aggrieved face while looking at a screen
Investing Articles

Is it time to buy Unilever stock?

Unilever stock has underperformed in the last five years. But with its portfolio of powerful brands, should I buy now…

Read more »