While the FTSE 100 has been relatively steady in these uncertain times, some of its members can’t stop falling in value. This group includes businesses that still dominate their respective industries and boast some of the best fundamentals around.
As a long-term Fool, this gets me salivating. To quote stock market legend Warren Buffett, what could be better than ‘buying quality merchandise when it’s marked down’?
Fallen star
One top-tier company that’s caught my eye more than any other is property portal Rightmove (LSE: RMV).
As you probably already know, the £3.3bn cap has a virtual monopoly when it comes to connecting estate agents, developers, and landlords with buyers and renters in the UK. For years, this has allowed it to post incredible margins of around 70%.
But recent share price performance has been woeful. As I type, the company has lost a third of its value in the last 12 months.
To be clear, Rightmove’s business model hasn’t suddenly broken. It’s still doing what it’s always done.
However, there have been developments – both within and outside of its control – that have caused serious concerns among investors.
What’s gone so wrong?
Perhaps the most prominent of the former has been management’s decision to invest heavily in AI. This caused the share price to plummet when the announcement was made last November.
It’s not just that investors didn’t like the idea of profit being lower for a while; it’s the possibility that this move might not work and that Rightmove will eventually lose its crown to a competitor. And the market doesn’t like that sort of uncertainty.
Recent events have only added to owners’ pain. At the start of April, the company was named in a £1.5bn lawsuit after estate agents claimed it had been charging excessive subscription fees. The news sent the shares to a six-year low.
Now throw in the prospect of interest rates staying higher for longer as a result of President Trump’s war in Iran. Given the impact this might have on an already-flagging property market, I think Rightmove’s plight makes some sense.
Time to make a move?
Then again, one could argue that an awful lot of negativity is priced in. After all, the forecast price-to-earnings (P/E) ratio of just 14 is already significantly below Rightmove’s five-year average of 28.
Although not a favourite among those looking to generate passive income, the dividend yield now stands at 2.6% too. Those cash distributions look set to be easily covered by expected profit. So, a cut seems unlikely as things stand.
There’s also been some director buying. According to records, four different directors snapped up stock in February and March. Prior to this, the last recorded buy by anyone on the board was in June 2023! This shouldn’t taken as a guarantee that Rightmove is about to stage an almighty recovery. Even so, I do like to see those who know the company best putting their own money to work.
Whether these arguments indicate that Rightmove is the best value proposition in the FTSE 100 right now is, of course, open to debate.
But I do think this is one stock that’s worth a closer look.
