Although 2021 was a positive year for the FTSE 100 index, the same can’t be said for all of its constituents. Indeed, while the index gained 14.3% last year, a dozen Footsie stocks fell by double-digit percentages in 2021. Also, eight FTSE 100 shares lost 20%+ of their value. In my experience, bottom-fishing in the Footsie’s bargain bin can uncover deep value. Here are three smashed stocks that I don’t own, but would buy today.
Three FTSE 100 fallers I’d buy
These three FTSE 100 stocks are among the index’s worst performers over the past 12 months:
| Company | Sector |
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12-month change | Market value | P/E | Earnings yield | Dividend yield |
| London Stock Exchange Group | Financials | 7,424.00 | -20.4% | £41.4bn | 83.2 | 1.2% | 1.0% |
| Flutter Entertainment | Gambling & betting | 11,275.00 | -24.6% | £19.8bn | N/A | N/A | 0.0% |
| Polymetal International | Precious metals | 1,162.50 | -31.4% | £5.51bn | 6.8 | 14.7% | 8.3% |
I regard all three of these fallen FTSE 100 shares as potential recovery plays, partly based on their terrible performances since early 2021. The best performer, London Stock Exchange Group (LSE: LSEG), has seen its shares tumble by 20.4% over 12 months. Meanwhile, Polymetal International (LSE: POLY) shares crashed by 31.4% in one year.
Why I’d buy LSEG
London Stock Exchange Group is a leading operator of stock exchanges and provider of financial data. For me, LSEG is a rare bird: a potentially undervalued FTSE 100 fintech firm. At their all-time peak, LSEG shares hit an intra-day high of 10,010p on 16 February 2021. However, they have since tumbled after the group struggled with integrating data provider Refinitiv (bought for $27bn in 2019). Yet I regard LSEG as having a powerful competitive moat around its business — something that billionaire investor Warren Buffett loves. Over the past five years, LSEG stock has soared by 141.5%, before crashing in 2021. Were LSEG to return to growth, I would expect its share price to respond accordingly. However, it faces stiff competition from very strong rivals, including several US giants.
Two more losers I’d buy
Second is Flutter Entertainment (LSE: FLTR), a FTSE 100 provider of gambling and betting. Flutter’s top brands include PaddyPower, Betfair, FanDuel, FoxBet, Sky Betting and Gaming, and PokerStars. Flutter employs more than 14,000 people, servicing 14m customers in 100 different markets. At their 52-week high, Flutter shares peaked at 17,130p on 19 March 2021. Ten months later, they cost 11,275p piece. That’s a collapse of 34.2%. Flutter’s recent earnings dipped following punter-friendly sporting results in October. Also, it temporarily withdrew from the Netherlands market and has exited other minor markets. But Flutter has heavy exposure to the US, where legal gambling is exploding and where it has a commanding 42% share of online sports betting. However, Flutter shares haven’t paid a dividend since payments were suspended since May 2020. Even so, I’d still take a punt on Flutter stock today.
Polymetal International is the third potentially cheap stock I’d buy now. Polymetal is a complicated beast: an Anglo-Russian miner of gold and silver, registered in Jersey and with headquarters in Cyprus. To me, this FTSE 100 share is the most conventionally cheap of the three. Currently, it trades on a lowly price-to-earnings ratio of 6.8 and an earnings yield of 14.7%. What’s more, the dividend yield of over 8.3% a year is one of the FTSE 100’s highest. Granted, precious-metals prices had a poor 2021, but who’s to say that this will continue in 2022-23? Based on its modest fundamentals, I’d buy Polymetal today.
