FTSE 100 stocks Croda International (LSE: CRDA) and Burberry (LSE: BRBY) have seen their shares struggle throughout 2023. Could they turn things around, and should I buy some shares while they’re cheaper than usual? Let’s have a look.
Croda is a specialty chemicals business operating in consumer care, life sciences, and the industrial sector.
As I write, Croda shares are trading for 4,555p. At this time last year, they were trading for 6,904p, which is a 34% drop over a 12-month period.
Croda rallied during the pandemic period as its products were in high demand. However, a post-pandemic hangover linked to excess inventory and falling demand has hurt the business. To add to this, macroeconomic volatility hasn’t helped either. This cocktail of issues has pushed down Croda shares, in my opinion.
Current macroeconomic issues are a risk I’ll bear in mind. Soaring costs and falling demand as spending levels drop from its core customer base has led to Croda dampening full-year profit forecasts.
Another issue for Croda is the fact the shares still look expensive on a price-to-earnings ratio of 30. Could I be overpaying for a stock that’s already experienced a mammoth drop if I bought shares today?
On a positive front, Croda does have an enviable record of dividend and performance growth. At present, a dividend yield of 2.5% isn’t the highest among FTSE 100 stocks but is still enticing. Furthermore, the business possesses a wide footprint and a good market presence that has helped it do well in years gone by. All of its segments have performed well historically. However, I do understand that past performance is not a guarantee of the future.
I reckon once volatility cools and the business can resolve its inventory issues, Croda shares could head upwards once more in line with performance. However, I’m not going to buy shares anytime soon unless they dip even more to make them too cheap to ignore.
Burberry is a global manufacturer, retailer, and wholesaler of luxury goods. It’s perhaps best known for its infamous chequered print design.
Burberry shares are down 30% over a 12-month period from 2,133p at this time last year, to current levels of 1,492p.
A cost-of-living crisis and weakened demand due to the current economic turmoil have hurt Burberry’s performance and shares recently.
However, as a luxury brand, there doesn’t seem to have been a drop off in its appeal, from what I can see. Plus, the business has a good track record of posting good margins and performance. This could help it once volatility subsides and trading and markets return to some form of normality.
At present, Burberry shares look good value for money on a price-to-earnings ratio of 12. Plus, a dividend yield of 4.3% could provide a decent passive income opportunity. However, it’s worth remembering dividends are never guaranteed.
Personally, I think Burberry is a prime example of macroeconomic and geopolitical issues hurting a firm’s investment viability. I reckon the shares will rise once more in the longer term. I’d happily snap up cheaper shares now ahead of this potential increase when I next have some investable cash.