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.

| 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.

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.

Created with Highcharts 11.4.3Croda International Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

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?

Should you invest £1,000 in Croda 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 Croda made the list?

See the 6 stocks

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.

Should you buy Croda 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 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.

Our best passive income stock ideas

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

Middle-aged white man pulling an aggrieved face while looking at a screen
Dividend Shares

Blimey, what’s happened to the Barclays share price?

After hitting a 15-year high at the end of February, the Barclays share price has plunged in the past two…

Read more »

Dividend Shares

On 8.6 times earnings and a cash yield of 9%, this FTSE 250 share seems too cheap

It's been a rough week or so for UK shareholders, with the FTSE 100 and FTSE 250 both plunging. Yet…

Read more »

Smiling senior white man talking through telephone while using laptop at desk.
Investing Articles

Here’s why I just bought this gold stocks fund for my SIPP!

I think investing in gold stocks could be the best way to capitalise on bullion's bull run. Here's a top…

Read more »

Investing Articles

How much passive income an investor could earn if they put £250 a month in an ISA at 40

Harvey Jones shows how small, regular investments can flourish into a generous passive income to secure a comfortable retirement years…

Read more »

Investing Articles

Stock market chaos! 3 pieces of investing wisdom from Warren Buffett

Billionaire Warren Buffett has been investing for many decades, making some of his quotes worth remembering when markets head south.

Read more »

Investing Articles

10%+ yields! 2 cheap dividend shares to consider as the economy wilts

These great value UK dividend shares could deliver a spectacular passive income even if the global economy sinks, says Royston…

Read more »

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 »