These 3 bombed-out FTSE 100 shares look grim

These three FTSE 100 shares are the index’s worst performers over the past 12 months. I already own one of these dogs, but would I buy another?

| 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.

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The past 12 months have been positive for the FTSE 100, with the index gaining almost 4.3% Adding in cash dividends lifts this return above 8%. Meanwhile, the US S&P 500 index has dived by 10.5% over the same period.

The FTSE 100 dodges the crash

In late 2021, I repeatedly warned that global stock valuations were far too expensive. I warned of an ‘everything bubble’ that also included bonds, property and digital assets. Hence, when this bubble popped in early 2022, I wasn’t surprised.

At that time, I frequently argued that the Footsie was far too cheap, both historically and geographically. Indeed, the index proved to be among the least volatile during 2022’s market meltdown.

However, not all FTSE 100 shares did as well as the wider index in 2022-23. Of 98 stocks in the FTSE 100 for one year, only 45 have risen over 12 months. This leaves 53 losing stocks over this period. Of these fallers, these are the three biggest losers:

The dogs of the Footsie

CompanyOcado GroupPersimmonSegro
SectorRetail/TechHousebuildingCommercial property
Share price678.8p1,419p835.4p
12-month change-54.9%-40.7%-35.8%
Market value£5.6bn£4.5bn£10.1bn

As my table shows, all three stocks have lost considerable value over one year. These price declines range from over a third at Segro to more than half at Persimmon.

Two of these stocks have an obvious connection. Persimmon is a leading housebuilder, while Segro is a major owner of commercial property. With interest rates rising and the cost of living soaring, both property groups have taken a beating.

The third of these FTSE 100 losers has its own particular problems. Technology-driven online retailer Ocado‘s share price has crashed spectacularly since peaking during the pandemic. On 30 September 2020, the stock briefly touched 2,914p and has since crashed by more than three-quarters (76.7%).

Would I buy any of these losers today?

My wife already owns Persimmon shares in our family portfolio. Since we bought them six months ago, they’ve dived by 23.5%. For now, we have no plans to sell this losing stock, but we also have no plans to buy any more Persimmon shares. However, in the long term, I expect property stocks to be winners, thanks to the UK’s chronic housing shortage.

That leaves two Footsie fallers. I’ve been a fierce critic of Ocado, which has yet to make a decent profit in 21 years of trading. Also, this stock has never paid a dividend, so it’s really not for me as an income investor. Then again, the group keeps signing contracts with new retail partners, so it may yet be a winner.

Segro — formerly Slough Estates — is a Real Estate Investment Trust: a listed property fund. It develops and owns UK and European business parks. This market is struggling nowadays, as consumers rein in their spending and work more at home due to Covid-19. Still, Segro shares do look cheap on fundamentals and also offer a 3% yearly dividend. But I’ll leave them to less risk-averse investors.

Of course, I could well be wrong. Each of these bombed-out FTSE 100 stocks could rebound when the UK economy strengthens. But I’d rather not buy these three ‘falling knives’ right now!

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 assessed. Consider taking independent financial advice.

Cliff D’Arcy has an economic interest in Persimmon shares. The Motley Fool UK has recommended Ocado Group Plc. 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

Illustration of flames over a black background
Investing Articles

2 red-hot UK growth stocks to consider buying in April

These two growth stocks are performing well, but can they continue to deliver for investors through 2024 and beyond?

Read more »

Charticle

Is JD Sports Fashion one of the FTSE 100’s best value stocks? Here’s what the charts say!

The JD Sports Fashion share price remains a wild ride during the first quarter. Could it be one of the…

Read more »

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »