Buying FTSE 100 shares when they’re down can produce big returns at times. Just look at Rolls-Royce. Anyone who invested there at the start of 2023 has now doubled their money.
Here, I’m going to highlight three Footsie stocks that have fallen 20% or more over the last year. Are these great buys for opportunistic investors?
Housebuilders have been smashed
Let’s start with housebuilder Persimmon (LSE: PSN). It has been absolutely crushed over the last year, losing close to 40% of its value.
Now, it’s not hard to see why this stock has been hammered. Right now, the UK housing market is under a lot of pressure due to the recent spike in interest/mortgage rates.
As a result, Persimmon’s revenues are expected to decline by about 40% this year. Meanwhile, its full-year dividend is expected to be about 65% lower.
Could the stock stage a recovery at some stage in the future? Absolutely. I’m just not sure if we are at the bottom yet, given that inflation remains high and the Bank of England is still raising interest rates.
So buying this stock now is a little risky, to my mind. Results tomorrow could provide some more clarity.
A turnaround under way?
Next, we have telecoms giant Vodafone (LSE: VOD). It’s also down about 40% over the last year.
There are a number of reasons this stock has tanked. One is a lack of growth. In recent years, Vodafone has really struggled on this front.
Another is the possibility of a dividend cut. Recently, the big payout here has not looked sustainable due to the fact the company has a huge debt pile (at 31 March net debt was €34bn).
The company has plans to turn things around however. And a recent trading update indicated that the plan could be working as revenue for the quarter ended 30 June was up 3.7%.
In light of this performance, I think the stock could be worth a closer look. If performance continues to improve, the shares could move higher.
Attractive dividend
Finally, we have wealth management group St. James’s Place (LSE: STJ). It’s down about 25% over one year.
This stock fell sharply last month after the company posted its half-year report. Profits for the period were down due to challenging business conditions, inflationary pressures and higher tax rates, so investors were unimpressed.
I think this could be an opportunity for long-term investors.
Looking ahead, demand for trusted, face-to-face financial advice should remain high due to the fact that the financial environment remains quite complex.
And as global stock markets rise over time, St. James’s Place’s earnings should increase.
It’s worth pointing out that there’s a decent dividend here. For 2023, analysts expect a payout of 54.2p per share, which translates to a yield of around 6%.
That means anyone buying the shares today is being paid to wait for a recovery in the share price, although dividends are never guaranteed.
