Three FTSE 350 flops have been stinking out my portfolio, so I didn’t need reminding that I made a costly error buying them.
But that’s what I got last week, when my fellow Motley Fool writers named five FTSE 350 companies they thought had further to fall. My three flops were all on the list, throwing a bucket of cold water over hopes of a lightning recovery.
I wasn’t surprised to see luxury car maker Aston Martin Holdings (LSE: AML) there. I sensed I was making a terrible error when I bought it. It’s gone bust seven times in just over a century.
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Can Aston Martin get into gear?
The 2019 flotation was supposed to signal a fresh start, instead the shares were down 96% when I dived in on 16 September. They’re down another 35.63% since. Over 12 months they’ve crashed 56.41%.
Fool writer Paul Summers noted that Aston Martin is weighed down by net debt of £1.3bn, dwarfing today’s £872m market cap.
Hope springs eternal and I cheered up when I saw the group’s Q3 loss was smaller than expected. That’s something isn’t it?
Even Paul admitted that volumes and profits should rise in the second half of 2024. He called Aston Martin a “punt stock” and that’s exactly how I’ve treated it. So far, it’s been a losing bet but I still think there’s a chance new CEO Adrian Hallmark could turn things round.
I wasn’t surprised to see Burberry (LSE: BRBY) on the flop list. This is another luxury stock smashed by plunging Chinese demand.
The Burberry share price is down 42.36% over the last 12 months but here’s the thing.
It’s actually my best performer over the last month, rebounding 26.19%. Sales are still falling but new CEO Joshua Schulman’s new ‘Burberry Forward’ strategic plan seems to play to the brand’s strengths. Rumours of a takeover bid from Moncler have excited some.
The Burberry price is flying (for now)
My fellow Fool Royston Wild admitted that appointing industry veteran Schulman “may prove a masterstroke”, but warned of tough times for luxury stocks. I’ll hold on and hope my recent winning streak continues.
And my final flop? Grocery retailer, e-commerce and logistics business Ocado Group (LSE: OCDO).
The FTSE 250 stock is a brilliant business on paper, but a nightmare in practice. It’s been pumping money into its cutting-edge customer fulfilment centres, while failing to turn a profit despite winning big-name customers.
As Fool writer James Beard pointed out, it’s borrowed heavily to invest in clever tech but hasn’t turned a profit for years. Worse, there’s no immediate prospect of it doing so.
This is another stock I bought after a crash. In this case 85%. I thought Ocado might fly when interest rates and borrowing costs fell. But with inflation sticky that scenario hasn’t panned out yet. The Ocado share price is down 46.07% over the last year. I’ll hold and hope, but I won’t buy more.
All three were big flops before I bought them. They’ve taught me a hard lesson about bottom fishing. However, while they’re down, I don’t think they’re out. I’ve noticed that on days when the FTSE 350 climbs, these three climb a little faster. If we get a bull run, they might just lead the charge.
