I’ve placed a big bet on this forgotten FTSE 100 share and think I’m onto a winner

Harvey Jones has been underwhelmed by the sluggish performance of this FTSE 100 share but believes it’ll soon swing back into favour.

| 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.

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.

It’s time I cast a critical eye over a FTSE 100 share in my portfolio that’s failed to move up lately. Is it time to sell or buy more?

Interest in commodity giant Glencore (LSE: GLEN) has faded lately judging by Fool traffic and its own share price performance. Yet I have a big position that I still expect to pay off over time.

There are times when the Glencore share price can shoot the lights out, but this isn’t one of them. That’s a shame, because I bought it last year hoping for growth and income, but have been disappointed on both fronts.

Should you invest £1,000 in The Prs Reit Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if The Prs Reit Plc made the list?

See the 6 stocks

LSE hidden gem

Glencore shares have fallen 1.77% over the last year, against a 10% rise on the FTSE 100 as a whole. They’ve thrashed the index over five years though, up 68.15% against 8.59%. I think they’ll do it again, when conditions change.

I judge the success or failure of my investments over a minimum period of five years, ideally much longer. Patience is particularly important when investing in cyclical stocks, and the natural resources sector is arguably the most cyclical of all.

For years, Glencore boomed on demand from China, which gobbled up around two thirds of all global commodity production. China isn’t booming any more. While its GDP looks set to grow a solid 5% this year, we have to recalibrate our sights. 

China has a more mature economy. Growth has to slow. Its shrinking population won’t help.

These concerns are reflected in Glencore’s share price, with the stock trading at just 13.7 times forward earnings. In April last year, its price-to-book ratio spiked to 2.34. Today, it’s back down to 1.63. It has been cheaper though. Let’s see what the charts say.


Chart by TradingView

The group’s return on equity has also slumped, as this chart shows.


Chart by TradingView

Glencore’s expected to be a beneficiary of the green transition, as it produces the metals and minerals required by renewables infrastructure and electric vehicles, but it’s not all one-way traffic. Legal & General recently sold its stake due to concerns over its shift into thermal coal.

My big recovery play

When I bought Glencore, the shares were yielding almost 6%. Dividend forecasts have now dropped sharply to just 2.23% in 2024 and 3.3% in 2025, as this chart shows. That’s a crushing disappointment for a dividend hound like me.


Chart by TradingView

Looking at these figures, it isn’t hard to see why Glencore has fallen out of favour.

Analysts are optimistic though, with 14 setting an average price target of 526.3p. That’s more than 15% higher than today’s price of 456p.

I’m optimistic too. Selling a commodity stock at this point in its cycle would be daft. Also, I believe Glencore will revive when interest rates are finally cut, and investor sentiment picks up.

I expect my shares to recover at pace. I just don’t know when. I have a large position so don’t need to buy more. But I’m definitely not selling.

Should you buy The Prs Reit Plc now?

Don’t make any big decisions yet.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.

And he believes they could bring spectacular returns over the next decade.

Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows...

When such enormous changes hit a big industry, informed investors can potentially get rich.

So, with his new report, Mark’s aiming to put more investors in this enviable position.

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

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.

Harvey Jones has positions in Glencore Plc. The Motley Fool UK has no position in any of the shares mentioned. 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.

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Investing Articles

Here’s the dividend forecast for Rolls-Royce shares as Trump rocks the markets

Rolls-Royce shares have joined in the volatility over the past week. However, with the direction being largely downwards, the dividend…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

Dividend yields of up to 11%! Here are 3 UK passive income stocks to consider

Searching for ways to supercharge your passive income with UK dividend stocks? Here are three that have grabbed our writer's…

Read more »

Young Caucasian woman at the street withdrawing money at the ATM
Investing Articles

£10,000 invested in NatWest shares at the start of 2025 is now worth…

NatWest shares surged into 2025, but things have become a little more complicated in recent weeks. Dr James Fox explores.

Read more »

Investing For Beginners

Why the FTSE 250 could outperform the FTSE 100 for the rest of the year

Jon Smith explains why the FTSE 250 could do better than its big brother when factoring in domestic exposure and…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Tariff fears send the Lloyds share price tumbling, but the dividend yield is climbing

Just when the Lloyds Banking Group share price had been rising steadily, along comes a global upheaval to knock it…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

Here’s how a stock market crash could help an investor retire years early

A stock market crash can be alarming -- but for the well-prepared investor, it can also be an exceptional opportunity…

Read more »

Investing Articles

1 key fact to remember in this stock market correction

This writer takes a look at a FTSE 100 investment trust that is catching his eye after the recent massive…

Read more »

Investing Articles

I was wrong about the Tesla stock price!

Tesla stock's been affected more than most by ‘Liberation Day’. But our writer has other concerns about Elon Musk’s company.

Read more »