I’m building a list of beaten-down FTSE 100 shares to buy for my portfolio today. I’m searching for winning companies that have fallen sharply more recently, but which have the potential to rebound strongly in time.
These two Footsie stocks have attracted significant dip-buying interest from Hargreaves Lansdown customers of late. In fact they are among the 10 most popular UK and US shares in the seven days to 6 March.
But which — if any — should I add to my Stocks and Shares ISA today?
St James’ Place
Financial services firm St James’ Place (LSE:STJ) has struggled to grow business during this tough economic period. But the biggest headache right now relates to scrutiny over its service levels and high charges.
It has set aside a staggering £426m to compensate customers following “a significant increase in complaints” over servicing, the firm announced last week. As a consequence, it slashed the total dividend by 55% in 2023, and said it would limit shareholder payouts to 50% of the underlying full-year cash result for the next three years.
The share price unsurprisingly plunged on the news. And Hargreaves Lansdown investors have been busy dip-buying the company in response, perhaps in hope that the charge draws a line under the problem. The firm attracted 1.31% of all buy orders on Hargreaves’ platform in the last week.
But I find it hard to get enthusiastic about this brusied company today. On the plus side, revenues across the financial services sector could rise sharply in the years ahead as people take greater control of their finances.
However, I’m worried about the reputational damage that’s been inflicted on St James’ Place. This can be crushing for businesses that look after peoples’ money. With the business subsequently overhauling its fee structure and scrapping withdrawal charges, profits will also be signficantly impacted for the next few years if not longer.
Right now the risks of owning this FTSE share are too great, in my opinion.
Reckitt
While I’m not tempted to buy St James’ Place shares today, I may consider opening a position in fast-moving consumer goods (FMCG) giant Reckitt (LSE:RKT).
This FTSE firm also collapsed last week following a disappointing trading update. However, it attracted 1.03% of all buy instructions from Hargreaves Lansdown clients in the past seven days.
Reckitt’s share price plunged on news of a hugely underwhelming end to 2023. While full-year like-for-like sales rose 3.5%, poor sales of cold and flu products meant that corresponding revenues slipped 1.2% year on year.
Broader sales grew weakly last year as price hikes prompted people to shop for cheaper brands. And it could remain an issue in 2024 too if interest rates fail to come down.
But as a long-term investor I’m still attracted by Reckitt’s shares. The company owns a huge stable of high-margin shopper favourites like Nurofen painkillers, Durex condoms, and Dettol disinfectants, demand for which should take off again when economic conditions normalise.
I also like the FTSE 100 firm’s broad geographic footprint that spans 68 countries. This provides solid exposure to fast-growing emerging markets that could give profits growth a significant boost.
I’ve been looking for an opportunity to buy Reckitt shares for some time. I’ll look carefully at adding it to my portfolio in the coming days.
