While the index has done comparatively well in 2022, some FTSE 100 shares have been hit hard. The latter includes some top-quality companies that rarely go on sale.
Autotrader
Online vehicle marketplace Auto Trader (LSE: AUTO) enjoyed strong positive momentum during the pandemic. Demand for second-hand cars and vans rocketed as cashed-up savers made efforts to avoid public transport and supply chain problems hit manufacturers.
Well, those times have passed and the stock has lost 24% in value since the beginning of the year.
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I see this as an opportunity and would buy today if I had the spare cash.
Auto Trader still has a commanding share of its market. For example, more than 75% of all time spent on automotive classified sites is done on its site. And while the cost-of-living crisis has pushed people to reconsider trading up to a new(er) car right now, this need/desire won’t be put off indefinitely. A fall in inflation could be the catalyst to get the stock moving again.
A price-to-earnings (P/E) ratio of 22 might still be too high for dedicated value investors but I suspect a lot of negativity is already priced in.
Rightmove
I’m equally bullish on property portal Rightmove (LSE: RMV). This is another FTSE 100 stock that has a virtual monopoly in its market.
Like Auto Trader, however, the share price has tumbled. Rapidly rising interest rates have popped the housing bubble and impacted most companies linked to this sector.
This bearishness leaves shares trading for 22 times forecast FY23 earnings. Again, that’s not ‘cheap’ in the traditional sense of the word. However, it’s way below the five-year average P/E (33 times). That feels like great value considering the £4.5bn cap boasts some of the highest margins in the whole UK stock market.
Of course, a recovery in the share price will take time if house prices continue to soften. Then again, the fact that Rightmove also serves prospective renters should mean that trading remains fairly resilient.
I regard this company as the baby that’s been thrown out with the bathwater and would buy today if I didn’t already have exposure via my holding in Smithson Investment Trust.
Halma
I’ve been bullish on Halma for years. So, what better time for me to build a stake than when investors are temporarily skittish and shares are down by a third?
The difference between Halma and the other businesses I’ve mentioned here is that demand for what it does — providing life-saving technology — is a lot less cyclical. This helps explain why the firm has grown its dividends by 5% or more every year for the last 43 years. We’ve been through a few recessions over that time. I doubt this one will be so bad as to interrupt the trend.
Importantly, recent trading has been stellar. Back in November, Halma posted a 19% rise in half-year revenue. Statutory pre-tax profit fell 13% due to a one-off gain over the same period in the previous year.
The only snag is that Halma trades on a still-rather-high P/E of 29. But, once again, this is a lot lower than the five-year average of 38.
As strange as it sounds, I think Halma is attractively priced. Again, I’d buy this FTSE 100 share if funds allowed.
