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I like a bargain as much as the next investor. While the FTSE 100 index of leading shares has been going great guns so far this year – it has repeatedly hit new all-time highs – that does not mean all shares within it are doing well.
Here are three FTSE 100 shares that have taken a tumble over the past year.
Diageo
Brewer and distiller Diageo (LSE: DGE) has tumbled 24% over the past year. Ouch!
That is despite replacing its chief executive, a move that was presumably intended in part to assuage investor concerns about the company’s performance.
The long-term demand outlook for alcoholic drinks is uncertain, with younger generations tending to tipple less than their forebears. Meanwhile, Diageo has been battling some specific challenges, including weak sales in Latin America and softer demand for many premium spirits.
Still, the business has very strong brands and unique production facilities that give it a competitive advantage. It has a proven, lucrative business model that has enabled it to raise its dividend per share annually for decades.
Although the challenges it faces are real, I am hopeful Diageo can bounce back and have bought its shares this year.
JD Sports
Even worse over the past year has been FTSE 100 retailer JD Sports (LSE: JD). Its share price has tumbled 36% in 12 months.
Like Diageo, JD is solidly profitable. Unlike Diageo, the reasons for the fall are less easy to pinpoint. Repeated profit warnings have not helped instil confidence on the company’s management, while a weak economy does pose the threat of people spending less on pricey trainers.
But to me, JD Sports looks like a company in pretty solid health. However, the share price fall means it now trades on a price-to-earnings ratio beneath 10.
It has a large, international estate of stores, giving it sizeable economies of scale. Its brand has built a powerful position among young consumers whose spending power ought to grow in years to come. It is also solidly profitable.
At its current price, I see it as a share for investors to consider.
Bunzl
While JD has had a tough year on the stock market, fellow FTSE 100 firm Bunzl (LSE: BNZL) has not done much better. The Bunzl share price is down 31% over the past year. Its revenues have fallen for two years on the trot, and last year also saw a decline in profit after tax.
While Bunzl is taking steps to address its underperforming North American business, I continue to see a risk that that division’s uneven recent performance could continue.
However, one of the strengths to Bunzl’s business is that demand for the products it sells, such as food packaging and commercial cleaning products, tend to hold up even in a weak economy.
It has honed its acquisition-focused growth model over decades and I expect it to keep making sizeable sums in years to come. I see it as one to research further.
