I think these 3 oversold FTSE 100 shares will soar in the next bull market!

FTSE 100 shares are climbing as investors anticipate a wider economic recovery following the US interest rate cut. Three strugglers are doing particularly well.

| More on:

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 a happy day for my portfolio as the three worst-performing FTSE 100 shares I hold are today’s biggest climbers.

With the UK’s blue-chip index up more than 1% this morning, most of the shares I own are doing nicely. I’m thrilled to see these three leading the charge. It suggests they have bags of recovery potential as investors see brighter times ahead.

My biggest riser is the biggest faller of the lot, luxury fashion chain Burberry Group (LSE: BRBY). It’s up 5.36% as investors celebrate yesterday’s 0.5% interest rate cut by the US Federal Reserve.

Stocks are flying this morning!

I’m not getting carried away. Even after this morning’s spike, I’m sitting on a 40% paper loss. Others have it worse. The Burberry share price is down a brutal 71.32% over 12 months. I bought hoping for a bumper yield, but the dividend has been axed.

Burberry’s shares still look cheap, trading at 8.21 times earnings. If I had cash to hand, I would buy more. Luckily, I think there will be more buying opportunities. Burberry has lost its identity, and will take time to claw it back. The road to recovery will be long and bumpy, but today offers a flash of hope.

The Glencore (LSE: GLEN) share price is also having a barnstorming day, jumping 5.12%. Like every other mining stock, it has been hit by the slowdown in China. The feared US hard landing hasn’t helped. Despite today’s rally, Glencore shares trade 17.18% lower than they did a year ago.

They also look good value, trading at 11.4 times earnings. Glencore’s dividends aren’t quite the force they were though, with a trailing yield of just 2.56%. However, I’m hoping for more. Last month, CEO Gary Nagle flagged up prospects for “for potential top-up shareholder returns, above our base cash distribution, in February 2025”.

If the China economic crisis gets worse, Glencore shares could still take another beating. Mining companies are always at the mercy of events, such as natural disasters or extreme weather. Yet I’ve seen the light and I’m keen to buy more.

Blue-chip recovery hopes

The same goes for spirits giant Diageo (LSE: DGE). Like Burberry, I bought this after the board issued a profit warning, only to be caught by further bad news.

The Diageo share price is up 3.25% today but is still down 21.14% over 12 months (and 33.67% over two years).

Diageo has been hit by the global economic slowdown too, with most of the damage done in its Latin American and Caribbean division, where sales plunged. Diageo made a dash for the premium drinks market, only to lose out as cash-strapped drinkers traded down to cheaper local rivals.

Today, its trades at 18.93 times earnings, which is pricier than both Burberry and Glencore, but cheap by Diageo’s standards. The yield is 3.12%.

My underlying concern is we may be witnessing a generational shift in attitudes towards alcohol, as Gen Z drinks less. But I think there will be enough drinkers out there to drive sales, once the global economy picks up. I’ve already got a big position in Diageo, otherwise I’d buy more today.

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 Burberry Group Plc, Diageo Plc, and Glencore Plc. The Motley Fool UK has recommended Burberry Group Plc and Diageo Plc. 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 Investing Articles

Investing Articles

My ISA is ready for a 30% penny stock crash on 30 October!

Investors in AIM-listed small-cap and penny stocks could be in for a fright later this month when the budget is…

Read more »

Road trip. Father and son travelling together by car
Investing Articles

Where will the Tesla share price go next? Here’s what the experts say

The Tesla share price has been going pretty much sideways since 2021, and its robotaxi event hasn't had much of…

Read more »

British Pennies on a Pound Note
Investing Articles

Can this 8%+ yielding penny share maintain its dividend?

Our writer holds this penny share and likes its yield of over 8%. But recent business performance has made him…

Read more »

Dividend Shares

How I could make a 10% yield via dividend shares for a juicy second income

Jon Smith explains how he could build a diversified portfolio of stocks with an exceptionally high yield for his second…

Read more »

Passive and Active: text from letters of the wooden alphabet on a green chalk board
Top Stocks

5 top ETFs Fools own in their Stocks and Shares ISAs

Do you own any ETFs in your Stocks and Shares ISA? Here, five Fools reveal why they have positions in…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

Is it madness to buy the S&P 500 now?

The S&P 500 has been on a tear for many years. But a (very) frothy valuation leaves our Foolish writer…

Read more »

Two white male workmen working on site at an oil rig
Investing Articles

The Shell share price could rocket past 3,000p, analysts claim, if oil heads for $300

In today's uncertain times the Shell share price could go anywhere, in any direction, says Harvey Jones. But he still…

Read more »

Investing Articles

What’s going on with the easyJet share price?

Harvey Jones is impressed by the strong recovery in the easyJet share price over the last couple of years. Now…

Read more »