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

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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.  

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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.

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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.

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