So far in 2021, the UK FTSE 100 index has actually beaten the US S&P 500 index. As I write, the Footsie trades around 6,646, up 185 points (2.9%) in 2021. The S&P 500 is up around 90 points in 2021, only 2.4% ahead. Given the huge outperformance of the S&P over the Footsie for the past decade, perhaps the tide is turning in favour of UK shares?
The FTSE 100’s biggest fallers over one month
Of course, not all FTSE 100 shares have risen in 2021. As well as some big gainers, there have been some huge howlers. For example, take these five sliding stocks, the worst performers in the Footsie over one month:
| FTSE 100 member | 1W | 1M | 3M | 6M |
|
Unilever (Consumer staples) |
-2.8% | –10.1% | -13.3% | -15.6% |
|
SSE (Energy) |
-3.3% | –10.2% | -2.5% | 8.3% |
|
GlaxoSmithKline (Pharma) |
-0.5% | –10.9% | -13.3% | -17.8% |
|
Just Eat Takeaway.com (Food delivery) |
-1.7% | –17.4% | -13.9% | -15.0% |
|
Ocado Group (Grocery tech) |
-6.5% | –21.4% | -0.1% | -8.0% |
Which stocks wouldn’t I buy today?
As you can see, the FTSE 100’s worst performer over the past month is online grocer Ocado. Its shares have crashed more than a fifth (21.4%) in a month. Then again, Ocado stock is up 95% over one year, 303.2% over three years, and 770.1% over five years. This makes it the FTSE 100’s best performer over five years, so it’s hardly surprising its shares are taking a breather after such magnificent gains.
The second-worst FTSE 100 stock over the past month is Just Eat Takeaway (JET). This food-delivery firm is known for its Just Eat UK brand. Although JET shares have dived by more than a sixth (17.4%), they are up 1.9% over the past 12 months. JET is a fast-growing company, booming in the pandemic and popular with growth investors. But it keeps making large losses as it scales up. Hence, as a value investor, JET is not for me.
I’d buy these two value shares
Third on my list of laggards is global pharma giant GlaxoSmithKline (GSK). The GSK share price has declined by more than a tenth (10.9%) over one month. It’s also been one of the FTSE 100’s worst performers over six and 12 months. GSK is the largest individual holding in my family portfolio, so its recent weakness — down a quarter (25%) in a year — has cost us plenty. At the current share price of 1,206p, GSK has a price-to-earnings ratio of 10.6 and an earnings yield of 9.5%. At over 6.6%, GSK’s yearly dividend yield is more than double that of the wider Footsie. These fundamentals look cheap to me, so I will keep buying more GSK stock.
Second, I also like the look of consumer-goods colossus Unilever, which sells more than 400 brands worldwide. Every day, more than 2.5bn people use Unilever products. That’s almost a third of the global population. Yet the Unilever share price is down a tenth (10.1%) over a month and almost a sixth (15.6%) over six months. At the current share price of 3,805p, Unilever trades on a price-to-earnings ratio of 20.8% and an earnings yield of 4.8%. The dividend yield of 3.9% is useful and, as an income-hungry investor, I’d welcome it in my family portfolio. Hence, Unilever is the second stock I’d buy from these five FTSE 100 fallers.
In summary, as a FTSE 100 value investor and income-seeker, I’m not put off by falling share prices. However, what works for me might not work for you. Thus, please take great care when selecting your shares!