Could one of these beaten-up FTSE shares be the next Rolls-Royce?

Edward Sheldon highlights three FTSE shares that have fallen significantly in recent years. Could they produce big returns from here?

| 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.

Rolls-Royce shares – which were hammered during Covid – have produced spectacular gains for investors more recently. After falling below 70p in October last year, they’ve spiked above 200p in 2023.

Here, I’m going to highlight three other FTSE shares that have tanked lately. Could one of these stocks be the next Rolls-Royce?

Persimmon

It’s fair to say Persimmon (LSE: PSN) shares have been hit hard. Two years ago, shares in the British housebuilder were changing hands for around 3,000p. Today however, they’re trading close to 1,000p.

Could the stock produce an explosive rebound like Rolls-Royce at some point?

Absolutely. Housebuilders have done this before.

But I’m just not sure if we’re at the bottom yet. Right now, conditions in the UK housing market are very challenging and analysts are lowering their earnings forecasts for this year and next.

And with the Bank of England (BoE) talking about raising interest rates further, there could be more pain ahead for housebuilders.

Given the uncertainty, I’d rather wait for signs that the property market is recovering, instead of buying the stock now.

Vodafone

Another FTSE stock that’s been beaten up recently is Vodafone (LSE: VOD). Before Covid, it was trading near 150p. Today, it can be snapped up for under 75p.

I think this stock has the potential for a decent rebound.

Vodafone has produced underwhelming results in recent years. However, new CEO Margherita Della Valle has plans to streamline the company’s operations and improve its performance.

And her turnaround plan appears to be working. For the quarter ended 30 June, for example, the company generated group service revenue growth of 3.7%, versus 1.9% the previous quarter.

If the company can continue to deliver on the results front, its share price could get a lift.

Having said that, I can’t see Vodafone shares producing the kind of gains Rolls-Royce shares have lately. That’s because a turnaround is likely to be much slower.

Dr Martens

Finally, we have FTSE 250 fashion footwear company Dr Martens (LSE: DOCS). Over the last two years it’s fallen from above 400p to near 160p.

Looking at recent developments, I think there’s scope for a substantial share price bounce at some stage.

One reason I say this is that activist investor, Sparta Capital, has been engaging with the company’s board in recent months. This could lead to improved financial and operating performances.

Another is that in mid-July, CEO Kenny Wilson – who has over 30 years’ experience building and growing global consumer brands – bought around £400,000 worth of company stock. This large purchase suggests the insider sees the company as undervalued.

I’ll point out that in the short term, lower levels of consumer spending could hold the shares back.

Taking a medium-to-long-term view however, I think this stock looks quite interesting at current levels.

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.

Edward Sheldon has no position in any of the shares mentioned. 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.

More on Value Shares

Man putting his card into an ATM machine while his son sits in a stroller beside him.
Investing Articles

3 essential factors for investors to consider when aiming for passive income success

Mark Hartley outlines three of the most important considerations investors are faced with when attempting to secure a lucrative passive…

Read more »

Investing Articles

Here’s why I’m buying FTSE 100 shares not S&P 500 stocks

Christopher Ruane has bought S&P 500 shares and may do so again. But for now, he's more focused on this…

Read more »

Investing Articles

As the FTSE 100 hits record highs, should I sell my shares and buy an index fund?

Our writer’s portfolio lagged the FTSE 100 last year, but he’s not giving up on stock-picking and highlights a recent…

Read more »

Happy young plus size woman sitting at kitchen table and watching tv series on tablet computer
Investing Articles

£10,000 invested in Lloyds shares 6 months ago is now worth…

Lloyds shares have performed well over 12 months but have broadly disappointed investors over the long run. Dr James Fox…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

I asked ChatGPT to name the best 5 UK shares to build wealth over 50 – and here they are!

Harvey Jones is looking to build a balanced portfolio of UK shares to fund his final years, and asked ChatGPT…

Read more »

Mature black couple enjoying shopping together in UK high street
Investing Articles

What would £10k invested in the FTSE 250 last year be worth now?

Our writer evaluates the performance of the FTSE 250 in 2024 and considers the prospects of a value stock that…

Read more »

Investing Articles

Down 15% and with a P/E below 9! Is the GSK share price still in deep value territory?

Harvey Jones has something to celebrate after a positive set of results boosted the GSK share price after a disappointing…

Read more »

Investing Articles

This FTSE AIM travel business could absolutely skyrocket in 2025

FTSE AIM stock Jet2 appears to be a bargain in plain sight. I’m desperately searching for reasons not to buy…

Read more »