This year, the FTSE All-Share index has pretty much been flat. Yet this doesn’t tell the full story of the UK stock market in 2023. Within the index, there are many shares down 20%, 30%, or even more.
Here, I’m going to highlight three FTSE stocks that have fallen 20% or more this year. Are they no-brainer buys for my portfolio for 2024?
British American Tobacco
First up is tobacco giant British American Tobacco (LSE: BATS). It’s currently down about 23% year to date.
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Now, after the big fall this year, this stock does look cheap. Currently, the P/E ratio here is only about 6.5 – about half the UK market average.
Additionally, it offers a high dividend yield. At present, the 2024 forecast yield is close to 10%.
I find it hard to get excited about this company however. Not only does it operate in a declining industry but it also has a massive debt pile (borrowings of about £42bn) on its balance sheet.
So while the stock could potentially provide solid returns from here given its low valuation and high yield, I think there are better stocks to buy for my portfolio.
Prudential
One beaten-up large-cap stock I do like the look of is Asia- and Africa-focused insurer Prudential (LSE: PRU). It’s also down about 23% year to date.
At the start of 2023, I was very bullish on this stock. I was convinced that China’s reopening would put a rocket under the share price. For a while there, my investment thesis was looking good. In January, the stock surged about 16%.
Since then however, it’s been all downhill, due to China’s economic woes.
I remain bullish on the shares though. Prudential’s recent results have been decent with many of its markets delivering double-digit growth. Meanwhile, the stock looks cheap right now.
So while China’s problems do add some uncertainty in the near term, I reckon it’s only a matter of time until the stock rebounds.
If I didn’t already have a large position here, I would be buying now.
Kainos
Another beaten-up stock I’m bullish on is FTSE 250 IT specialist Kainos (LSE: KNOS). It’s down about 38% year to date.
In recent years, this stock has been quite expensive. And it’s easy to see why. Revenues have been growing rapidly (five-year growth of 288%) and the company has generated a huge return on capital.
After its fall this year though, the valuation has come right now. Currently, the forward-looking P/E ratio is only about 21. I think that’s an attractive valuation given Kainos’ growth potential going forward.
It’s worth pointing out that in the short term, this company is vulnerable to a slowdown in technology spending. Recently, it has experienced some weakness in spending in the healthcare sector (this is what hit the share price).
Taking a medium-to-long-term view however, I think Kainos has the potential to deliver attractive returns from here.
I already own this growth stock and I plan to buy more shares for my portfolio in the near future.
