Down 16% and 18% – are my 2 biggest FTSE 100 losers about to rally hard?

Two FTSE 100 stocks in Harvey Jones’ portfolio have suffered double-digit losses. He’s standing by them for now, but he’s also starting to get nervous.

| 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.

Not every FTSE 100 stock pick can be a winner. I hold around 20 blue-chips and two have suffered: mining giant Glencore (LSE: GLEN) and pharmaceuticals titan GSK (LSE: GSK).

Their shares are down 8% and 12%, respectively, over 12 months. Personally, I’m sitting on paper losses of 16% and 19%, despite picking up a few dividends and yes, it hurts.

While the declines are disappointing, I’m hanging on in the hope of a turnaround. So what are the chances?

Can the Glencore share price rebound?

As one of the world’s largest miners and traders, Glencore’s heavily exposed to the volatile prices of key resources like coal, copper, and zinc.

That was fine when China was posting double-digit GDP growth year after year, while gobbling up 60% of the global supply of metals and minerals. Those days are over and as one Beijing stimulus package after another underwhelms, we can’t assume they’ll come back.

Glencore also has to navigate the pivot towards renewable energy and a low-carbon future. Its substantial coal business remains highly profitable but is at odds with global decarbonisation goals.

President Donald Trump’s mooted tariffs are another concern. The Glencore share price jumped on Friday, along with the commodity sector generally, as Trump (for now at least) adopted a less strident stance. There will no doubt be further twists to come.

The shares look good value trading at 10.5 times earnings while its 2.6% yield may be topped up by one-off dividends in the spring.

The 15 analysts offering one-year share price forecasts have produced a median target of 493p. If correct, that’s a bumper increase of almost 30% from today. I’d hate to miss out if that happens. In a famously cyclical sector, I’d be daft to sell when the shares are down.

Long-term GSK investors can be forgiven for feeling grumpy. The stock’s down 18% on a decade ago. And although investors have received plenty of dividends in that time, they’d have hoped for more. Today’s 4.25% trailing yield’s solid but still below the 6% or so that investors used to expect.

GSK shares are down, but not out

Pouring money into R&D instead was supposed to boost the pipeline and share price. It’s not really happened yet. Spinning off consumer healthcare business Haleon didn’t add much shine to the mothership either.

I thought the GSK share price would rebound last year as it settled a US class action case over heartburn medication Zantac. The relief was short-lived. And with Trump targeting big pharma, investors have another worry.

GSK shares are cheap, trading at 8.8 times earnings, but there’s a lingering suspicion of a value trap here.

The 17 analysts offering one-year share price forecasts have produced a median target of 1,618p. If correct, that’s an increase of almost 19% from today. Combined with that yield, this would give me a total return of 23%. I can’t see it happening, but I’ll hang on just in case.

I could definitely see Glencore rallying hard from here. I think GSK will be a long, slow haul. I continue to hold both but I really should have bought Nvidia.

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 GSK and Glencore Plc. The Motley Fool UK has recommended GSK. 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

Would Warren Buffett buy BP shares, as oil excitement grows?

Warren Buffett is a big investor in the oil business, and BP's performance has been attracting investor attention in results…

Read more »

Cropped shot of an affectionate young couple posing with a bunch of flowers in their kitchen on their anniversary
Investing Articles

Here’s how long-term loyalty to UK shares can lead to dazzling returns!

The most successful UK and US share investors buy shares to hold for the long term, as this report shows.

Read more »

Investing Articles

NatWest has just smashed brokers’ dividend forecasts!

After NatWest delivered a Valentine’s Day surprise to investors, our writer thinks the experts may have to raise their dividend…

Read more »

Investing Articles

The NatWest share price slips in early trading despite positive FY 2024 results. What’s the deal?

The NatWest share price is down slightly this morning after the bank released its final results for 2024. Our writer…

Read more »

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

My Legal & General shares have climbed just 7% — so how come I’m sitting on a 20% gain?

Harvey Jones' trading account is showing only a modest return on his Legal & General Shares, but on drilling down…

Read more »

Investing Articles

Prediction: the BP share price could rise in 2025 (or it might fall!)

Following this week’s release of the energy giant’s 2024 results, our writer reviews the prospects for the BP (LSE:BP.) share…

Read more »

many happy international football fans watching tv
Investing Articles

What’s gone wrong with the FTSE 100’s ‘King of Trainers’?

Feeling the pain of a 28% drop in the JD Sports share price over the past three months, our writer…

Read more »

Investing Articles

Is it too late for investors to consider buying these outstanding FTSE 100 shares?

Stephen Wright wonders whether now's the time to consider buying shares in the FTSE 100’s outstanding companies, despite some high…

Read more »