Some of my FTSE investments have suffered badly over the past 12 months, and their prices are way down. But I think they’re still good companies with good long-term prospects.
If I had the money, I’d buy more of all of them today. In reality, though, my next investment cash should be enough for one purchase. Today, I’m looking at three that I might buy more of.
The Lloyds Banking Group (LSE: LLOY) share price has fallen 14% over the past 12 months.
At around 42p, the shares are on a forecast price-to-earnings (P/E) multiple of only 6.4, and a 2023 dividend yield of 6%.
I could go on about the P/E being less than half the FTSE 100‘s long-term average. But that only matters if Lloyds shares can pull back closer to their longer-term valuation. I doubt that will happen any time soon, as Lloyds is big in mortgages. A slump in the housing market, or even a fear of one, won’t help.
On the other hand, high interest rates mean better lending margins for the banks. That, though, could well be offset by falling loan volumes and possible bad debts.
I still see Lloyds as a good long-term buy, despite the short-term risks. But there could be better buying opportunities ahead.
My Persimmon (LSE: PSN) shares are down 54% in the past 12 months, and on a forecast P/E of only 5.6 for this year.
Earnings are expected to fall over the next two years as house sales dip. But that would still put the P/E at only around eight. On that score, the shares look oversold to me.
Persimmon’s big dividend and its ongoing capital return programme have been big parts of the draw. But that programme is being halted for now, and special dividends are suspended.
Still, I think even Persimmon’s ordinary dividend is likely to remain attractive even through a downturn. I think the downturn is likely to keep the pressure on the shares, so I see no immediate rush to buy now. But I expect the UK’s housing market to remain strong in the long term.
I’ve already topped up my boohoo (LSE: BOO) holding once, but the price has continued on down.
Shareholders have taken a 75% loss over the past 12 months. But we have seen some gradual signs of strength returning since early October. That’s only relative, mind, and there must be a chance of the collapse having further to go.
Analysts have a couple of years of losses marked down for boohoo, after soaring inflation in recent months gave the company an extra kicking. So it’s hard to put any kind of valuation on the stock right now.
But I can’t help thinking a recovery over the next two years could send the price climbing again.
I should probably put my next investing cash into a new stock, and improve my diversification for the recession. But a top-up of one of these still looks tempting.
Alan Oscroft has positions in Lloyds Banking Group, Persimmon, and boohoo group. The Motley Fool UK has recommended Lloyds Banking Group and boohoo group. 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.
Motley Fool UK 2022