These 2 FTSE 100 shares have bombed in 2022/23, but I’d buy one now!

These two FTSE 100 shares have fallen on hard times, losing over 37% and 41% respectively over 12 months. But I see one of these flops as a recovery play.

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Starting in June 2022, my wife and I built a mini-portfolio of new shares. We bought 17 new holdings: seven FTSE 100 and three FTSE 250 shares, plus seven US stocks.

While this new portfolio’s performance has been mixed, two Footsie shares have been very disappointing. Indeed, both are among the FTSE 100’s biggest dogs over one year.

Footsie flop #1: Persimmon

Shares in UK housebuilder Persimmon (LSE: PSN) have been the biggest disaster of our new crop.

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We bought in at £18.56 a share in July 2022, after its shares had plunged from their 2022 high of 2,930p. Alas, they had much further to fall.

Here’s how this flop stock has performed over seven timeframes:

Share price1,211p
One day+2.5%
Five days-1.1%
One month-9.7%
Year to date-0.5%
Six months-0.2%
One year-37.3%
Five years-53.0%

This share has declined over all periods ranging from five days to five years. Notably, it has dived by nearly two-fifths over 12 months and plunged by more than half over five years.

After this sustained price plunge, Persimmon’s market value has dropped below £3.9bn. If it keeps falling, then it might be relegated to the FTSE 250 in a future quarterly review.

However, Persimmon stock looks cheap, trading on a price-to-earnings ratio of 6.9, for an earnings yield of 14.4%. Also, its dividend yield of 14.1% a year is 3.9 times the Footsie’s cash yield.

But these fundamentals are based on historic earnings — and UK house prices just registered their first yearly fall since December 2012. Also, soaring mortgage rates make it much more harder for buyers to move home.

Summing up, I will not be buying more Persimmon stock at present. Of course, I could be wrong and the UK housing market might make a miracle comeback this year. But I won’t bet on this outcome.

FTSE 100 failure #1: Vodafone

Our second failing Footsie share is the stock of telecoms giant Vodafone Group (LSE: VOD). We bought a holding in December 2022 for 90.2p a share.

At first, things went well, as Vodafone shares moved above £1 by mid-February. Sadly, they have since come crashing back to earth. At the current share price of 73.7p, we are nursing a paper loss of 18.3%.

Here’s how this stock has performed over various periods:

One day-0.2%
Five days-1.5%
One month-10.5%
Year to date-12.7%
Six months-12.0%
One year-41.3%
Five years-60.7%

This table suggests that Vodafone shares have been a brutal value trap for years. The share price has dived by more than two-fifths over 12 months and collapsed by over three-fifths in five years. This leaves the group valued at below £19.9bn today.

Then again, this FTSE 100 stock looks dirt cheap to me. It trades on a price-to-earnings ratio of 7.5,
for an earnings yield of 13.3%. However, the dividend yield of 10.5% a year is covered only 1.3 times by earnings, which offers little room for error.

Then again, led by a new CEO and with a mega-merger deal with CK Hutchison finally announced this week, I have high hopes of a turnaround for Vodafone in 2024 onwards. Hence, I’d buy more of this FTSE 100 share today — if I had cash to spare, that is!

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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 and Vodafone Group shares. The Motley Fool UK has recommended Vodafone Group Public. 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.

Like buying £1 for 51p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

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What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

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