These are the FTSE 100’s biggest flops over a year. I’d buy 1 today

These five FTSE 100 shares have crashed between 38% and 57% over the past 12 months. But I see deep value (and future gains) in one of these fallen angels.

| 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.

It’s been a fairly good 12 months for the FTSE 100, the UK’s main stock-market index. The Footsie has gained 6.8% since 27 April 2021, beating the US S&P 500‘s 12-month loss of 0.3%. Also, adding in cash dividends of around, say, 4% takes the FTSE 100’s return into double-digits. Not bad, given global concerns over Covid-19, Russia/Ukraine, inflation and interest rates, plus slowing growth in China.

The FTSE 100’s winners and losers

As you’d expect, returns from individual FTSE 100 shares over the past year are widely dispersed. Of 99 shares in the index for the past 12 months, 38 stocks have gained in value. Gains for these winners range from 2% to an impressive 89.1%. The average rise among these 38 gainers is 21.3%.

However, at the other end of this scale lie 61 losing shares that have declined in value since late April 2021. Declines among these losers range from just 0.2% to a brutal 56.7% loss. The average decline among these 61 FTSE 100 losers is 19%.

Top of the FTSE 100 flops

Here are the five worst-performing FTSE 100 shares over the past 12 months (all returns in this article exclude dividends).

CompanySector12-month return
ITVBroadcaster-37.8%
AVEVA GroupTechnology consulting-41.4%
Hargreaves LansdownFinancial services-43.3%
Flutter EntertainmentGambling & betting-48.2%
Ocado GroupOnline retailer-56.7%
Using closing prices as at 26/04/22

As you can see, losses among these FTSE 100 flops range from almost 38% at broadcaster and producer ITV (LSE: ITV) to almost 57% at Ocado Group, the technology-driven online retailer. The average fall across all five flops is 45.5% — nearing a drop of half of one’s capital.

Looking at this morning’s market, I can see things have got even worse for shareholders in AVEVA Group. As I write, shares in the Cambridge-based tech company slumped another 14.4% this morning, following its latest trading update. Yikes.

I’d buy one of these Footsie failures today

As a veteran value investor who loves bottom-fishing for cheap shares, I often scour the FTSE 100 looking for ‘fallen angels’. These are otherwise healthy businesses whose share prices have taken a brutal beating, but have potential for recovery.

Of the five Footsie flops in the above table, I’m drawn to one beaten-down share in particular. This potential ‘dog turned star’ stock is ITV. As I write, the ITV share price stands at 73.76p, more than 60p below its 52-week high of 134.15p hit on 14 June 2021. This leaves the stock down 45% from its 2021 peak, valuing the broadcaster at under £3bn.

At this price, ITV shares trade on a modest price-to-earnings ratio of 7.9 and an earnings yield of nearly 12.7%. What’s more, the dividend yield of almost 4.5% a year is above the FTSE 100’s cash yield of around 4% a year.

Why have ITV shares crashed so hard? Analysts are concerned about bold plans to spend on growth to keep up with deep-pocketed media rivals. Then again, ITV has a strong balance sheet, with total liquidity of £1.5bn and only £414m of net debt at the end of 2021.

Despite the ongoing risks ITV faces (notably from streaming services), I’d happily buy this cheap FTSE 100 share for my family portfolio today!

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.

Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown, ITV, and Ocado Group. 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.

More on Investing Articles

Black woman using loudspeaker to be heard
Investing Articles

3 high-dividend FTSE 250 stocks to buy right now!

The London Stock Market is packed with top high-dividend stocks to buy. Here are a handful I'm considering buying, despite…

Read more »

Woman using laptop and working from home
Investing Articles

How I’m using my Stocks and Shares ISA to generate lifelong passive income

I’m looking to build a portfolio of assets that will pay me an income in my retirement. Here’s how I’m…

Read more »

Close-up of British bank notes
Investing Articles

Is this the best time in a decade to start buying FTSE 100 dividend shares?

UK dividend yields are rising again. I reckon any time is a good time to start buying dividend shares. But…

Read more »

Smartly dressed middle-aged black gentleman working at his desk
Investing Articles

Director dealings: Rolls-Royce, Admiral, Dunelm

Director dealings can indicate whether a company's doing well. So, here are this week's biggest insider transactions at three FTSE…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

I’d start investing in the FTSE 250 with these 2 stocks

Were our writer completely new to the FTSE 250, he’d buy shares in these two companies today.

Read more »

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

3 reasons I’d aim to earn extra income by investing £1,000 in dividend shares

Our writer has a lot of ideas to earn extra income. Here he explains why the one he likes the…

Read more »

One English pound placed on a graph to represent an economic down turn
Investing Articles

Stocks of the week: Aviva, Antofagasta, Just Group

My 'stocks of the week' take in those that have caught my eye in one way or another. All three…

Read more »

British Pennies on a Pound Note
Investing Articles

Selling for pennies, are Rolls-Royce shares a value trap?

Rolls-Royce shares have been falling in price. But does that make them good value now? Our writer considers what value…

Read more »