3 ‘irresistible’ FTSE 100 stocks to buy before the market rebounds

Some members of the FTSE 100 (INDEXFTSE: UKX) are starting to trade on attractive valuations. Paul Summers highlights three he’d buy that could recover well, in time.

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Just when the UK share prices will recover is anyone’s guess. However, we can be pretty sure they eventually will. Given this, I’ve been looking at three FTSE 100 stocks that could turn out to be great buys for me at the current time. As long as I can commit to holding them for years rather than a few weeks or months, that is.

Next

With most people being forced to tighten their belts due to rising prices, buying shares in a high street fashion retailer sounds like a risky move right now. However, Next (LSE: NXT) is already starting to look good value.

Having tumbled 22% in 2022, the FTSE 100 stock can be snapped up for a little over 11 times earnings. That’s already less than the five-year average of 12 times earnings. Although the income can never be guaranteed, a prospective 3.3% yield looks like it will be easily covered by profit too.

Should you invest £1,000 in Howdens right now?

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Sure, the price could fall lower, especially if we get some earnings downgrades in the sector over the next few months. An eventual recovery in the UK economy won’t make this space any less competitive either.

However, Next boasts strong margins relative to peers. Its multichannel business model also gives it some protection over online-only players struggling with high return rates.

Perhaps drip-feeding my money in over time might be the optimal approach?

Rightmove

Property portal Rightmove (LSE: RMV) has seen its value fall 24% in 2022, so far. That’s a hefty reduction considering just how dominant this company remains in its market. Despite popping up over the years, rivals have struggled to steal users away from the £5bn-cap’s site.

Risks? Well, one obvious concern here is that the housing market has peaked. A recession could impact demand, hitting all/any companies connected to the sector. This arguably makes the valuation of 25 times forecast earnings look pretty full, considering the potential headwinds ahead.

Then again, I said ‘irresistible’. I didn’t say ‘irresistibly cheap’. I sincerely doubt Rightmove will ever trade at bargain-basement levels. This is a company that generates massive margins and returns on the money it puts to work. Moreover, the current valuation is quite a bit lower than the five-year average price-to-earnings (P/E) ratio of 32.

I’d be willing to buy Rightmove today.

Howdens Joinery

As things stand, kitchen supplier Howdens Joinery (LSE: HWDN) is a member of the FTSE 100. However, a 35% fall in the share price in 2022 means its time in the Premier League may prove short-lived.

Perhaps I shouldn’t be surprised. With the DIY boom brought about by the pandemic now history, and discretionary spending hit hard by inflation, things were never going to be great for Howdens.

Like the other companies mentioned, things could get worse before they get better. A new kitchen purchase can be postponed, after all. This, when combined with a possible demotion to the FTSE 250, could see more investors head for the exits.

Notwithstanding this, I continue to think this is a great company to hold for the long term. Considering a solid share of its market, a P/E of 11 appears good value. Again, this is lower than the five-year average P/E of 17.

There’s also a 3.3% dividend yield to tide me over while I await a recovery.


Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Howden Joinery Group and Rightmove. 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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