Share your opinion and earn yourself a free Motley Fool premium report!

We are looking for Fools to join a 75 minute online independent market research forum on 15th / 16th December.

To find out more and express your interest please click here

Thank goodness I didn’t invest in these 3 UK shares 5 years ago!

Harvey Jones highlights three UK shares that have suffered a torrid time lately, and thanks his lucky stars they aren’t wreaking havoc on his investment portfolio.

| More on:
Two female adult friends walking through the city streets at Christmas. They are talking and smiling as they do some Christmas shopping.

Image source: Getty Images

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’ve done well out of UK shares over the last five years. I’ve had some big winners, including Rolls-Royce and Lloyds Banking Group, and a fair few disappointments such as Glencore and Diageo. I’ve also sidestepped some real trouble. I’ve come close to buying three FTSE 100 stocks that have had a terrible time. Does their future look brighter?

WPP stock has tanked!

My first dodged bullet is advertising group WPP (LSE: WPP). It’s the worst performer on the index down 60% over five years and 65% over 12 months.

The business was already wobbling when I considered buying, as it dealt with the bruising departure of driving force Martin Sorrell in 2018 after three decades. I like buying into companies when they’re out of favour in the hope of a rebound further down the line. There’s been no rebound here.

Advertising spend slid as the cost-of-living crisis left consumers feeling stretched. The pressure on WPP intensified as companies pulled more marketing in-house. The big tech giants are capturing more of the global ad market, while advances in AI encouraged businesses to produce content in-house.

The shares look cheap with a price-to-earnings (P/E) ratio of 5.95, but the apparent 13% yield is illusory because the dividend is being cut. I wouldn’t consider it today.

Persimmon has crumbled

The last five years have also been miserable for Persimmon (LSE: PSN). The shares are down roughly 50%, though there are signs of a recovery, as they’re up a modest 6% in the last year.

It’s been tough for housebuilders as high interest rates push up mortgage costs and squeeze demand, worsening affordability issues. The end of the Help to Buy scheme in 2023 removed a prop of support.

Yet investors might consider buying Persimmon shares today. Interest rates could fall further over the next year, cutting mortgage costs and reviving activity. I don’t expect house prices to rocket as wage growth slows and unemployment climbs, but we still have a housing shortfall. Persimmon is forecast to yield 4.55%. The shares trade on a price-to-earnings ratio of about 14.4. It might be one to consider buying for the next five years.

Cardboard demand under pressure

My final near-miss is paper and packaging specialist Mondi (LSE: MNDI). It’s down 48% over five years. There’s no sign of recovery yet, as it’s down 25% over 12 months.

Mondi has struggled as the cost-of-living crisis knocks online shopping, hitting demand for cardboard. The board blames “challenging conditions” and “subdued demand”, as earnings continue to slide. Management is cutting costs and working existing assets harder while waiting for a wider recovery.

Mondi looks reasonably valued with a price-to-earnings ratio near 12, yet with confidence fragile and key markets over-supplied, I think the recovery will take time. The trailing yield of 6.8% may tempt some and I reckon Mondi should come good with a five-year view. It’s worth considering, but demands patience.

Investing moves in cycles and I can see Persimmon and Mondi enjoying brighter days. I imagine that WPP faces a lot more pain first.

Harvey Jones has positions in Diageo Plc, Glencore Plc, Lloyds Banking Group Plc, and Rolls-Royce Plc. The Motley Fool UK has recommended Diageo Plc, Lloyds Banking Group Plc, and Rolls-Royce 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.

More on Investing Articles

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

How big a Stocks and Shares ISA is needed to earn £1,000 of passive income each month?

Christopher Ruane does the maths and explains how a Stocks and Shares ISA could potentially generate a four-figure monthly passive…

Read more »

Businessman hand stacking up arrow on wooden block cubes
US Stock

This iconic S&P 500 fashion stock is one of my favourite picks for 2026

Jon Smith explains why he's optimistic about the prospects for a S&P 500 company that has smashed the broader index…

Read more »

Black woman using smartphone at home, watching stock charts.
Growth Shares

These analysts have updated their forecasts for the Rolls-Royce share price

Jon Smith takes notes from updated broker views for the Rolls-Royce share price and offers his opinion on where it…

Read more »

Three generation family are playing football together in a field. There are two boys, their father and their grandfather.
Investing Articles

How much do you need in a SIPP to target a passive retirement income of £555 a month?

Harvey Jones crunches the numbers to show how a SIPP investor could assemble a portfolio of FTSE 100 shares to…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

1 FTSE 250 share to consider for the coming decade

With a long-term approach to investing, our writer looks at one FTSE 250 share with a dividend yield north of…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

3 UK shares to consider for the long term

What will the world look like years from now? Nobody knows, but our writer reckons this trio of UK shares…

Read more »

BUY AND HOLD spelled in letters on top of a pile of books. Alongside is a piggy bank in glasses. Buy and hold is a popular long term stock and shares strategy.
Investing Articles

Martin Lewis just gave a brilliant presentation on the power of investing in stock market indexes like the FTSE 100

Had an investor stuck £1,000 in the FTSE 100 index a decade ago, they would have done much better than…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

I asked ChatGPT if we’ll get a stock market crash or rally before Christmas and it said…

Harvey Jones asks artificial intelligence if the run-up to Christmas will be ruined by a stock market crash, and finds…

Read more »