The Motley Fool

2 top stocks to buy that are down over 15% this year

Image source: Getty Images

Already in 2021 I’ve seen a wide spread of strongly performing stocks mixed with some underperforming ones. But just because a stock has had a rough start to the year doesn’t mean that it’s not worth me looking at it. In fact, good companies can see a share price dip in the short term. As a long-term investor, a dip of 10%-20% could represent a good opportunity to buy, with the aim of the stock recovering. Here are two top stocks to buy that I think can recover.

Teething issues

First up is the London Stock Exchange Group (LSE:LSE). The share price is down 19% since the start of the year (but up 18% over 12 months). Most of this drop actually came over the course of a couple of days at the beginning of March. It slumped due to news about the cost of integrating a new data provider that it has bought. Refinitiv is a news, data and analytics company, specialising in finance.  

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Although the purchase is generally seen as a positive, the company announced that it would mean £1bn in costs just this year to integrate. Personally, I see this as a short-term issue. The purchase price of over £19bn means that LSE clearly sees major value from Refinitiv in the long term.  

I think this is a top stock that I’d buy now because of the incremental benefit the deal will offer in the future. There’s already talk about the large cost savings from overlapping departments and leadership positions. A streamlined company post-integration will only serve to strengthen LSE as a whole.

I could be wrong, and the integration could be messy if the two sides don’t gel together, denting the share price. This is the main risk I see to my viewpoint.

A top FTSE 100 mining stock

The second top stock I’d buy now despite a slump is Fresnillo (LSE:FRES). The global mining company has seen the share price drop around 22% since we started 2021. But it’s up 61% over 12 months.

The main reason for the recent drop was the cautious outlook given when the company released its latest results. The main concern is around the impact of Covid-19 in Mexico. Fresnillo is the largest gold miner in Mexico, and operates multiple sites in the country. Twice during 2020 the gold production numbers had to be reduced, due to the impact of the virus.

I agree that the situation in Mexico is likely going to take longer to get under control than it took here in the UK. But I don’t see this as a long-term issue, so would use this dip to buy this top stock now.

My outlook is actually positive for the stock. Full-year results impressed me, with a 90.5% increase in gross profit year-on-year. This was thanks to higher gold and silver prices along with lower than expected costs. Any business that’s delivering those kind of results looks to be in a strong position to me.

So even with some likely issues in Mexico, I think that overall Fresnillo should recover. I’d buy it now as a top stock for my portfolio.

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

jonathansmith1 has no position in any of the shares mentioned. The Motley Fool UK has recommended Fresnillo. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.