Right now, the FTSE 100 index is not far off where it was at the start of the year. But this doesn’t tell the full story of the stock market in 2022. Look within the index, and you’ll see that there are many FTSE 100 shares that are down 20%, 30%, or even 40%.
Here, I’m going to highlight three Footsie stocks that are down 30% or more this year. Are they worth buying for my portfolio for 2023?
Value in the FTSE 100
Let’s start with athletic footwear and clothing retailer JD Sports Fashion (LSE: JD). Its share price is down over 40% in 2022.
At current levels, I think this stock looks quite interesting.
Sure, it’s vulnerable to a consumer slowdown. 2023 could be a challenging year for a lot of consumers, with disposable income drying up.
However, right now, the forward-looking price-to-earnings (P/E) ratio here is under 10.
At that multiple, I see value on offer. This is a company that’s benefiting from a number of trends including the casualisation of fashion and the increasing focus on health and wellness. It’s also a company with a great long-term growth track record.
One risk that does concern me a little is that brands could potentially cut JD out and sell directly to consumers. Nike has recently been doing this with Footlocker.
Overall, however, I think the stock looks attractive. I’m very tempted to have a nibble.
Low P/E ratio
Next up is housebuilder Taylor Wimpey (LSE: TW). It’s also down over 40% year to date.
Now, this stock does look cheap right now. Currently, the forward-looking P/E ratio is only about five.
However, I think 2023 is likely to be a tough year for the housebuilders due to economic conditions.
I’m not the only one with this view. Recently, BofA Global Research said that it expects 2023 to be the most challenging year for UK housebuilders since the 2008/09 Global Financial Crisis.
On the back of this outlook, it double downgraded Taylor Wimpey shares from ‘buy’ to ‘underperform’.
It’s worth noting that in past recessions, Taylor Wimpey has cancelled its dividend.
In light of the risks here, I’m happy to pass on this stock.
Benefiting from higher interest rates
Finally, we have investment platform operator Hargreaves Lansdown (LSE: HL). It’s down nearly 40% this year.
This is another stock that I think looks interesting at current levels. The valuation and the dividend yield here are attractive, in my view. Currently, the forward-looking P/E ratio is a little over 15, while the yield is near 5%.
Meanwhile, the company is benefiting from higher interest rates. The higher rates go, the more interest it can generate on customers’ cash deposits. With UK interest rates predicted to top 4% in 2023, its profits should get a big boost.
A key risk here is stock market weakness. If markets fall, profits will be impacted. Competition from new investing start-ups such as Freetrade is another risk.
Overall though, I think the risk/reward is attractive. I already own a few Hargreaves Lansdown shares. However, I’m seriously considering buying a few more for 2023 and beyond.
