It’s been a bumpy start to the year for stock markets this means that plenty of FTSE 100 shares now look great value. I’d like to pop these three world-class stocks into my Stocks and Shares ISA before the market finally rallies.
Luxury fashion business Burberry Group (LSE: BRBY) is high on my shopping list. For years, this premium brand traded at a premium price, with a typical price-to-earnings ratio of around 25 times. It benefitted from the Chinese middle class consumer boom, but China is struggling right now, and so is Burberry. Markets didn’t appreciate this month’s profit warning, which suggested a 27% drop in adjusted operating profits to between £410m and £460m.
High fashion, low price
Burberry’s shares have crashed 43.96% in 12 months and now trade at just 10.39 times earnings. The yield has climbed to 3.32% too.
The stock got a lift from recent news that Beijing is lining up a $278bn stimulus package, rising 8.84% last week. I’d like to buy Burberry before it recoups more lost value.
It wasn’t the best performing stock on the FTSE 100, though. That honour belongs to private equity investment firm Intermediate Capital Group (LSE: ICP) which ended the week 14.37% higher. I took the news badly.
On 28 December, I tipped the stock to perform strongly in 2024, but didn’t have enough cash to add it to my portfolio. Sadly, I can’t buy every business I like, I just don’t have that sort of money.
Intermediate Capital Group provides capital for acquisitions, pre-IPO financing and management buyouts, and tends to do better when economic spirits are high. It should get a lift when interest rates fall as this will reduce funding costs and boost sentiment.
Its shares jumped on Thursday (25 January) after the board reported a solid increase in fee-earning assets under management for Q3 and said it had beaten its $40bn fundraising targets ahead of schedule.
Growing nicely
The share price is up 31.05% over the last year, but it still doesn’t look that expensive trading at 18.1 times earnings. It also yields 4.27%. Private equity is volatile, though, so if the economy sputters the stock could slip, but I’d still love to hold it.
I do hold Smurfit Kappa (LSE: SKG), having bought the FTSE 100 paper and packaging giant last summer. I’d like to buy it again, even though its shares have been volatile since I purchased them. They tumbled 10% in September as markets decided Smurfit had overpaid to secure its £16bn tie up with US rival WestRock.
Markets way well be right, but it does give the company access to the huge US market, under its proposed Smurfit WestRock brand.
Smurfit’s share price is down 10.4% over the last year but it’s now starting to recover from its September shock, bouncing 18.68% over three months. The risk is that we get a recession, which hits consumer spending and desire for all that corrugated paper that pad our online purchases.
Smurfit is cheap trading at 8.19 times earnings while yielding 3.91%. As with the other two stocks here, I’d like to buy before I have to pay more.
The post I’d like to buy these 3 world-class FTSE 100 shares in an ISA before the market rallies appeared first on The Motley Fool UK.
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Harvey Jones has positions in Smurfit Kappa Group Plc. The Motley Fool UK has recommended Burberry Group 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.
