My 2 favourite FTSE 100 shares plunged 5% and 7% on Friday – time to buy?

As markets wobble, Harvey Jones is tempted to buy two FTSE 100 dividend growth stars: Ashtead Group and Intermediate Capital Group.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Friday was a bad day for the FTSE 100, which fell 1.31% as investors fretted over a potential US meltdown. Some London-listed blue-chips felt a lot faster than that, including two that have been at the top of my ‘buy’ list for months.

I’ve resisted buying them so far because I decided I was coming too late to the share price party. Have I been given a second chance?

Equipment rental specialist Ashtead Group (LSE: AHT) has had a brilliant millennium. In the 20 years to June 2023, it delivered a total return of 45,532%, with dividends reinvested, according to AJ Bell. That would have turned £10k into a staggering £4.5m.

Should you invest £1,000 in Ashtead Group Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Ashtead Group Plc made the list?

See the 6 stocks

Ashtead Group

The main driver was its US-based subsidiary Sunbelt Rentals, which now supplies 90% of Ashtead’s total group revenues.

Given today’s market cap of £22.52bn, Ashtead is unlikely to repeat its glory growth days. But I’d still like to own it as a long-term buy-and-hold.

The Ashtead share price fell 5.42% on Friday. Over 12 months, it’s down 9.52% as the US economy finally stutters.

Created with Highcharts 11.4.3Ashtead Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Ashtead’s sales got a kick from Joe Biden’s Inflation Reduction Act, which helped push full-year 2023 revenues to a record $10.86bn, up 12%. Growth is likely to slow this year as higher interest rates finally take their toll on the US economy.

Ashtead’s shares are now a lot ‘cheaper’ than they were in 2021 and 2022, based on its price-to-earnings ratio. Let’s see what the chart says.


Chart by TradingView

I think recent stock market volatility is a brilliant opportunity to get a stake in this top company at a reduced price, and I’ll buy it when I have cash to spare.

I’ve also been keeping tabs on another stellar performer, private equity specialist Intermediate Capital Group (LSE: IG).

On 13 June, I pointed out that it had delivered a staggering total return of 915.1% over the last decade, the highest on the FTSE 100. Over the last year, its shares are up 50.06% ,but they dropped 7.13% on Friday. It was the biggest faller on the index.

Created with Highcharts 11.4.3Ashtead Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Like Ashtead, I was wary of buying on the back of a strong share price run. Today offers a more attractive entry point.

An opportunity?

ICG is a global alternative asset manager supplying capital to growing businesses. It’s a sector that tends to do well when confidence is high, but struggles when investors grow nervous. The new Labour government is looking to tighten tax rules on private equity, which won’t help sentiment.

In June, I concluded it was a frothy time to buy the stock, which had just posted a 132% jump in full-year profits to £258.1m. Some of that froth has gone now.

It’s still growing nicely, with Q1 assets under management up 23.7% to $101bn, even if only $70bn of that sum is fee earning.

Intermediate Capital Group still looks good value trading at a modest 13.05 times earnings while yielding 3.99%. I think it’s even better value than Ashtead. I’m crossing my fingers and hoping it will fall further before I find the cash to buy it.

But this isn’t the only opportunity that’s caught my attention this week. Here are:

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

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.

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Aj Bell Plc. 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.

Like buying £1 for 51p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

Dividend Shares

£287 a week? Here’s how an investor could use an ISA to build alternate income

Jon Smith outlines both the value in using an ISA for investing and also how a tidy second income can…

Read more »

Investing Articles

Is the BP share price on the way up again?

The BP share price has gained 13% over the past few weeks. Christopher Ruane considers why and explains his long-term…

Read more »

Investing Articles

Can Tesla shares go any higher?

Tesla shares have nearly doubled in just a few months. Our writer thinks the business has a lot of open…

Read more »

Group of young friends toasting each other with beers in a pub
Investing Articles

JD Wetherspoon: are rising sales enough to offset higher costs for the FTSE 250 pub chain?

The UK’s low-cost pub chain is still Stephen Wright’s top FTSE 250 stock to buy, even with the prospect of…

Read more »

Investing Articles

What’s wrong with the Unilever share price?

The Unilever share price looked like it was about to kick into gear... but it's idling again. Harvey Jones now…

Read more »

Investing Articles

The easyJet share price hits a little turbulence despite a positive trading update

The easyJet share price didn’t respond well to the airline’s update for the quarter ended 31 December. Our writer tries…

Read more »

Investing Articles

Investors craving energy plays in 2025 may wish to consider this 8%-yielding UK stock

Harbour Energy is a UK stock with a diversified portfolio and yield level that may appeal to investors seeking traditional…

Read more »

Dividend Shares

Cheap stocks could make an investor £357 a month in second income

Jon Smith explains how cheap stocks that pay out dividends can offer the best of both worlds for an investor…

Read more »