Don’t we love it when some of our favourite FTSE 100 shares are selling near their 52-week lows?
It might not look so good when one of them is a stock I bought some time ago for a fair bit more than the current price. But as a long-term investor, it gives me a chance to buy more now, cheaper, right?
I’m talking about insurer Aviva (LSE: AV.).
Should you invest £1,000 in Aviva right now?
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Time to top up?
Aviva shares aren’t quite as low as they were in October 2022, but they’re down 40% in five years.
The business was already in trouble before Covid arrived and sent financial stocks into tailspin. But the firm slimmed down and I think it looks a much fitter beast today.
It’s in an at-risk sector in 2023, with financial stocks having it tough. Anything that harms our free cash and keeps us away from saving and investing has to hurt the companies that offer saving and investing services.
But Aviva is on a price-to-earnings (P/E) ratio of 11, dropping to 8.5 on 2024 forecasts. And the forward dividend yield stands at 8.3%.
I think that’s too cheap.
Precious dirt
Next up is Anglo American (LSE: AAL). The mining giant’s shares are up 25% in five years, but they’ve lost half their April 2022 price.
Mining stocks are classic cyclical stocks. And miners can look attractive when they’re near a peak. That’s when commodity prices are high, margins are big, and dividend yields can soar.
But when demand next drops, dividends are cut and the share prices fall. And that, I’d say, is the time to buy.
The outlook for the Chinese economy might be a bit fragile, and demand there is usually the big driver behind metals and minerals prices.
So that suggests Anglo American might be shaky for a while longer. But for long-term investors looking to get into the sector, I reckon it’s worth a closer look.
Comfort buy
Finally, drinks giant Diageo (LSE: DGE) is the third of the FTSE 100 shares hitting lows that I want to look at.
Celebrate in the good times, commiserate when times are bad. Isn’t it nice that alcohol fits in just as well with either?
Well, it’s nice for Diageo shareholders’ pockets, if perhaps less so for their livers.
Diageo has good defensive qualities, which is why it tends to command a higher valuation. And, right now, it’s on a P/E of 20.
But I think that’s good value for a quality company like Diageo. For one thing, forecasts drop to 16 over the next couple of years, and it’s a fair bit below the P/E of 25-30 the stock often reaches.
There does seem to be a push against alcohol in developed countries and belt-tightening inflation could hit the share price.
But there are big developing markets out there still largely untapped. This could be a good buy for the next bull run.
