Last week, we saw a number of FTSE 100 stocks tank. Shares that got hit included airline operator International Consolidated Airlines (LSE: IAG) or ‘IAG’, which was down 12%, property search powerhouse Rightmove (LSE: RMV) that fell 14%, and orthopaedics company Smith & Nephew (LSE: SN.), down 9%.
Should investors consider buying these shares after this weakness? Let’s discuss.
Insiders are buying Smith & Nephew
Let’s start with Smith & Nephew. Because I think there could be an opportunity here.
This stock fell after the company put out a Q3 trading update on Thursday (6 November). However, while the update wasn’t mind-blowing, it wasn’t terrible.
For Q3, underlying revenue was up 5%. And looking ahead, the company said that it’s expecting 5% growth for the full year.
I think investors were just looking for more here (after strong results from rivals). That’s why the share price fell.
Now, it’s worth noting that since the share price fell, two company directors have stepped up to buy stock (one bought around £450k worth of shares). This suggests that they see potential for a rebound.
Add the fact that the stock trades on a price-to-earnings (P/E) ratio of 13 and offers a dividend yield of nearly 3% and I think it’s worth a closer look right now. That said, competition from bigger, more powerful rivals is a risk.
Rightmove is offering quality at a reasonable price
Turning to Rightmove, it posted a trading statement on Friday. And this sent the share price into freefall (it was down 28% at one stage).
The reason why was that the company said that it’s going to ramp up its spending on artificial intelligence (AI) in the years ahead. As a result, it only expects 3%-5% profit growth next year (on revenue growth of 8%-10%).
Investors were obviously disappointed with the profit guidance. I think there was also scepticism in relation to the AI spending.
Is this stock an attractive proposition to consider after the fall? I think so.
Even with the lower profit guidance, I put the P/E ratio at under 20. That’s low for a company of this quality.
That said, a risk here is disruption from ChatGPT (which could potentially cut out platforms like Rightmove). This is something to keep an eye on.
IAG looks cheap
Finally, zooming in on IAG, it also put out a trading statement (for Q3) on Friday. Here, numbers were a little disappointing.
For the quarter, revenue was flat year on year. Meanwhile, operating profit was only up 2%.
One problem for the airline operator was that travel to the US was relatively weak. This is an issue I warned about back in May.
So, is there any opportunity here for investors? Possibly – the stock does look cheap right now (the P/E ratio is only six).
However, I reckon there are probably better opportunities in the market today. Especially now that consumer spending is starting to show signs of weakness (which could lead to less demand for long haul flights).
To my mind, this stock is quite risky. Some of my colleagues here at The Motley Fool are bullish on it though.
