It’s not been a great year so far for UK investors. The FTSE 100 is down over 1,450 points in six months. That’s a loss of 19.2% since late January, before Covid-19 became a global crisis.
The FTSE 100’s fastest fall
The damage came in February and March, with the FTSE 100 crashing below 5,000 on 23 March. At 35%, the fall from 2020’s high (17 January) to 23 March was the steepest (but not deepest) fall in the index’s 37-year history.
As the FTSE 100 tracks the overall performance of its members, it’s merely an average. And I say, “Averages invite comparisons”. Thus, some shares have soared, while others have crashed and burned.
The 27 winners
Again, the main market index is down almost a fifth over the past six months. But there are six FTSE 100 shares with prices up between 31% and 88% since January. A portfolio of these six winners would be ahead by an average of 53% this year. Nice.
Then come nine shares with prices up by between 11% and 23% over six months. These stocks have easily beaten the wider FTSE 100. Next are 12 shares with positive, single-digit returns ranging from 1% to 9%. So far, that’s a total of 27 FTSE 100 members producing capital gains for their shareholders.
The 73 losers
As there are actually 101 FTSE 100 shares, this leaves 74 shares. Removing one share not listed for six months leaves 73 shares. All 73 shares have fallen in value in six months. Yikes.
Fifteen shares are down by single digits. A further 22 have fallen 10% to 20%. Even so, these 37 shares have actually beaten or matched the FTSE 100’s near-20% loss. Further down are 14 shares diving 20% to 30%, plus 11 crashed between 30% and 40%.
The dogs of the FTSE 100
With 62 of 73 fallers accounted for, this leaves these 11 shares, the ‘dogs of the FTSE 100’ over six months:
Compass Group -40.5%
Royal Dutch Shell A -42.4%
Land Securities Group -42.9%
Royal Dutch Shell B -45.0%
NatWest Group -46.7%
Lloyds Banking Group -47.5%
Informa -50.1%
Melrose Industries -55.2%
ITV -55.4%
Rolls Royce Holdings -58.4%
International Consolidated Airlines Group -65.8%
IAG, owner of British Airways, is at the bottom. With no clear path to profitable air travel, I’d avoid its shares. Likewise for Rolls Royce, whose future is tied to airlines’ health. Ditto Melrose, whose shares crashed on Wednesday after awful forecasts.
Media companies Informa and ITV are struggling to attract customers and advertising (though I see deep value in ITV as a FTSE 100 takeover target). As a landlord, Land Securities is having a bad time collecting rents and faces big writedowns within its property portfolio. Compass Group can’t serve much food while entire workforces work from home.
My two picks from the dogs
Of three remaining FTSE 100 candidates, my picks are Lloyds and Shell. I would buy Lloyds at 30.1p today. For the price of a pack of gum, you gain part-ownership of a £21.3bn bank with millions of customers. I can imagine Lloyds’ future dividend hitting 3p a year, a yearly cash return of roughly 10% at this price.
Shell is one of the world’s oil supermajors, employing 86,000 people across 70 countries. When Shell’s suspended dividend resumes, it might exceed 6% a year on today’s 1,207p share price.
In short, both Lloyds and Shell are attractive as value and future-dividend plays, which is why I’d happily buy both FTSE 100 shares today.
