One of my favourite headlines in May proclaimed “£40bn wiped off UK stocks as global market rout continues.” Yet the FTSE 100 ended the month up 64 points, or 0.8%. So much for the rout, then.
Still, a number of FTSE 100 shares did fall during the month. And when that happens, I go looking for buying opportunities. I’m liking what I found.
Here are five I already rated as good companies, which look even cheaper now:
Should you invest £1,000 in Carnival 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 Carnival made the list?
| Stock | Share price | Fall in May | 12-month change | Forecast P/E | Forecast div yield |
| Royal Mail Group | 307p | -9.9% | -47% | 9.7 | 7.0% |
| WPP | 918p | -8.3% | -5.8% | 12.0 | 4.0% |
| JD Sports Fashion | 118p | -8.1% | -34% | 11.5 | 0.7% |
| Hargreaves Lansdown | 837p | -6.6% | -49% | 18.9 | 4.6% |
| ITV | 70.5p | -5.4% | -44% | 6.4 | 7.3% |
Stand-out stock
WPP stands out to me. The marketing and PR firm had a few tough years after the departure of founder and CEO Sir Martin Sorrell. But it’s since restructured and is back to revenue growth. And it posted a decent profit in 2021.
Analysts expect earnings to grow over the next couple of years, dropping that already attractive P/E lower. The outlook for marketing spend in the current economic climate must be squeezed, and I think that’s the biggest risk. But WPP is returning cash to shareholders, and offers a well-covered dividend.
I think sentiment could be turning. I rate WPP a long-term buy.
Better value
Investment services provider Hargreaves Lansdown intrigues me, too. For years I’ve seen it as a company I’d like to hold, but overvalued. But since a peak in 2019, the shares have lost two thirds of their value in what I see as a much-needed correction.
The danger is that the slide could carry on further, as the stock is still on a P/E valuation above the FTSE 100 average. But forecasts suggest further earnings and dividend growth. Hargreaves Lansdown could be creeping on to my buy list.
Contrarian retail
It’s wise to be wary of retail when inflation is soaring and shoppers are suffering. But JD Sports still looks an attractive proposition to me. And again, I think it’s a stock that has been overvalued but has returned to a more rational level.
JD has been through a typical growth share cycle, reaching valuation levels that proved unsustainable. But I’m seeing some kind of maturity emerging, with investors weighing the shares more towards long-term fundamentals.
The price could well head further down over the rest of the year. But I rate JD as one to keep an eye on.
Two transformations
The final two in my list, Royal Mail and ITV, have both been through transformative years. And they still face their individual pressures. For Royal Mail, that’s included industrial relations problems and regulatory risk, while ITV faces technological spend. And they are in competitive businesses.
But both have turned round their earnings falls, and both look set to grow their dividends. Those valuations look too low to me.
I think all of these could do well over the next five years. But WPP is my top pick.
