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.
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.
The post These FTSE shares have fallen 20%+ in 2023. Are they no-brainer buys for 2024? appeared first on The Motley Fool UK.
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
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Edward Sheldon has positions in Kainos Group Plc and Prudential Plc. The Motley Fool UK has recommended British American Tobacco P.l.c., Kainos Group Plc, and Prudential 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.
