The following FTSE 100 and FTSE 250 stocks have fallen sharply in recent weeks. Here’s why I believe they’re top dip buys for next month.
Grainger
Residential rents in the UK are surging as the market’s supply shortage worsens. According to Rightmove, average advertised rents for properties with two bedrooms or fewer are up 33% year on year from pre-pandemic levels.
A weak pipeline of new housing developments — allied with a steady exit of buy-to-let investors — means this shortage will continue. Investing in Grainger (LSE:GRI), the country’s largest listed residential landlord, could be a good idea in this climate.
Like-for-like rental growth here sped up to 7.1% in the eight months to May, while its occupancy rate shot to a record 98.7%.
Although its share price has retreated more recently, Grainger shares still trade on a forward price-to-earnings (P/E) ratio of 25.8 times.
High multiples like this could promote more price weakness if bad news comes down the line. News that high build cost inflation looks set to persist, for example, could weigh on the FTSE 250 firm. But on balance I think the company remains an attractive investment.
Centamin
Falling gold prices have pulled the share prices of mining stocks like Centamin (LSE:CEY) sharply lower. Fears that the Federal Reserve could keep hiking interest rates has yanked yellow metal prices back below $1,900 per ounce.
I think this represents an attractive opportunity to open a position in Centamin. Not only does the FTSE 250 miner now trade on a forward P/E ratio of just 7.2 times. Its dividend yield for 2023 sits at an index-beating 4.3%.
Buying gold stocks can be a good way for investors to diversify their portfolio. In other words, when economic crises hit and financial markets sell off, having exposure to safe-haven assets can help limit losses.
I like this Egypt-focused business in particular. Not only are its shares dirt cheap, but steps to boost production at its flagship Sukari mine could lead to significant long-term share price growth. Encouraging drilling results at its Doporo mine in the Côte d’Ivoire provide additional reason to be optimistic.
Hargreaves Lansdown
Trading activity at investment firms has weakened significantly of late. At Hargreaves Lansdown (LSE:HL), average monthly share dealing volumes tanked 12% between April and June.
Rising interest rates and a bleak economic outlook are affecting investor appetite. And there’s a danger that difficult conditions could last well into 2024.
But I think recent heavy share price weakness represents an attractive buying opportunity. As I type, Hargreaves Lansdown is the second-biggest faller on the FTSE 100 over the past month. And as a consequence it trades on a forward P/E ratio of just 12 times.
This is well below the company’s historical average in the mid-to-high 20s.
Further volatility is possible, but over the long term I believe profits here could soar. People are investing like never before as worries over the State Pension and the rising cost of living increase. And there’s still plenty of room for growth in this market.
Price comparison site Finder.com says that just 42% of Britons invest their money today. As one of the industry’s biggest players, Hargreaves Lansdown has the brand recognition to make the most of this opportunity.
