The FTSE 100 has fallen off from levels around 8,000 points in the middle of February down to 7,500 points at the moment. Some stocks within the index have experienced even larger falls. Here are a few that have dropped at least 20% in the past month that I’m taking a look at as possible additions to my portfolio.
Poor results hurting
Beazley (LSE:BEZ) is the first company in this category. The stock is up 30% over the past year, but has fallen by 20% in the past month.
The insurance company has struggled due to poor full-year results that came out at the beginning of the month. Even with an increase in the gross and net insurance premiums written (versus last year), profit fell. For 2022, profit before tax was $191m versus the 2021 figure of $369.2m.
A big factor in this were losses from bond investments due to rising interest rates. This remains a risk for this year, given that I don’t think interest rates have peaked here in the UK or the US.
It’s true that insurance companies typically are attractive due to dividend payments and good cash flow. However, the current dividend yield here is only 2.45%. Overall, I’m not going to buy right now.
Choppiness in the commodity waters
Anglo American (LSE:AAL) has fallen by 22% in the past month, recently hitting 52-week lows. Over a one-year period, the stock is down 33%.
The business mines for a variety of things, including diamonds, iron ore, nickel and more. Unfortunately, prices for some key commodities has fallen, hurting Anglo American. The latest report also showed a fall in production volumes. Compound this with the impact of inflation (particularly from last year), and I can see why the stock has been dropping.
Yet I feel that buying around 52-week lows could be an opportunity. The core business is robust. I see some of the risks as being transitory, such as inflationary pressures. I can also benefit from a generous dividend yield of 6.52%. This is a stock that I’m considering buying.
Bottom of the barrel
Finally, we need to talk about Ocado Group (LSE:OCDO). It’s by far the worst performer in the FTSE 100 right now. The stock has dropped by 31% in the past month and 60% in the past year.
I recently covered the stock in more detail. My takeaway was that the underperformance is coming from the retail division. Despite other areas doing well, the retail division is by far the largest part of the group. Until this changes, I don’t see how it can do well.
The grocery space in the UK is very competitive with slim profit margins. I get that the company is trying to shift more towards client fulfilment centres, but I feel this is going to take years before an investor like myself would see tangible benefits.
Don’t get me wrong, I believe that at some point in the future Ocado will be a great buy as an innovate tech business. But it’s not there right now and I won’t be investing.
