After plunging 65%, is this forgotten FTSE blue-chip the best share for me to buy today?

Harvey Jones is looking for the best share to buy for his Stocks and Shares ISA in 2025 and thinks this oversold Dividend Aristocrat could be due a stellar recovery.

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I’m on the hunt for the best share to buy for 2025 and beyond, and I’m tempted by one I seriously considered snapping up last July.

The company’s FTSE 100-listed speciality chemicals manufacturer Croda International (LSE: CRDA). Its shares have slumped 65% over the last three years, and 28% over 12 months.

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Lately, I’ve made a habit of buying top blue-chips that have fallen out of favour in the hope of picking up a bargain. Yet this isn’t a surefire strategy. Falling knives have a habit of continuing their descent. So what’s up with Croda?

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Can the share price finally recover? 

Croda was one of those stocks that boomed during the pandemic, as customers built up their stockpiles of vital chemicals. Vaccine makers were particularly voracious, because they rely on its lipids.

When the pandemic eased, the buying stopped. Instead of building stocks, customers needed to work them down. Full-year 2023 sales fell 11% as customers reduced inventory levels. Adjusted profit before tax crashed 33% to £308.8m.

Destocking has been a “prolonged” process, according to the board. It’s forecasting that adjusted pre-tax profits will be even lower in 2024, somewhere between £260m and £280m.

The share price has also been punished by the growing strength of the pound, relative to the US dollar and euro. That’s expected to knock a thumping £14m off full-year profits, well above the board’s original estimate of £5m.

Q3 industrial specialties sales rose a healthy 14% to £50m, but consumer care division sales edged up just 5% to £228m and life sciences sales rose just 3% to £129m. I’m not convinced so far.

This FTSE 100 stock’s a Dividend Aristocrat

Croda shares offer one brilliant thing. The company’s increased its dividend every single year for more than three decades. This is a true Dividend Aristocrat.

Yet in 2023, the board lifted the full-year payout by less than 1%, from 108p per share to 109p. Despite that – and the huge share price drop – it yields a modest 3.29%.

Here’s another surprise. Croda’s relatively expensive, trading at 19.8 times earnings. Earnings have been falling along with the share price. However, back in July, it was even pricier, trading at 33.5 times earnings. So it’s moving towards bargain territory.

I’m glad I didn’t buy Croda shares six months’ ago. I’d be down 18% if I had. But I now think it’s worth considering for long-term investors who like bargain hunting, but are willing to accept some short-term volatility and losses.

Sales could pick up as de-stocking finally draws to a close. What the pound does is anybody’s guess. I’ve got no idea.

The 14 analysts offering one-year share price forecasts have produced a median target of just over 4,405p. If correct, that’s a bumper increase of 33% from today’s 3,300p. Croda may not be the very best FTSE 100 share to buy today, but I can’t see many better.

This time I’ll buy it, as soon as I have the cash.

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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 no position in any of the shares mentioned. The Motley Fool UK has recommended Croda International 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.

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