Online retailer Ocado Group (LSE: OCDO) is the best performer of all among FTSE 100 shares over the last five years, delivering a total return of 399%, according to research from AJ Bell. This is a tech stock that happens to be working in the grocery business, and has been successfully licensing its pioneering robotics and software solutions worldwide.
Investors bought Ocado anticipating strong growth tomorrow, rather than profits and dividends today. Yet their enthusiasm has faded, with the Ocado share price down 53% over 12 months. It’s now one of the worst-performing FTSE 100 shares, rather than the best.
There’s no dividend and most years Ocado makes a loss rather than a profit, and now investors are fretting over when those profits will arrive.
I’d buy one of these FTSE 100 shares
UK supermarket rivals are catching up in online fulfilment, and Amazon remains a constant threat. Inflation is also squeezing grocery market profitability. The UK government’s mooted online sales tax wouldn’t help either.
Most FTSE 100 shares face a list of challenges, but Ocado’s are mounting. It still boasts cutting edge pureplay technology. Bumps in the road were supposed to be expected, but it looks too risky for me to buy right now.
Mining giant Anglo American (LSE: AAL) thrashed most FTSE 100 shares over the last five years. It came in second place with a total return of 283%. The last year has been strong too, as it returned another 16.3%.
Like all commodity giants, this £43.37bn stock is benefiting from today’s soaring raw material prices. However, its share price slumped last week when it reported a 10% drop in first-quarter output. It blamed Covid-related staff absences, high rainfall in South Africa and Brazil, and problems at its metallurgical coal and iron ore operations.
I reckon this could also be a buying opportunity, with the stock trading at just 7.8 times earnings. It also offers a juicy 6.6% yield.
The strict Chinese Covid lockdown could hit demand and prices, as we’ve seen with the falling copper price. Yet Anglo American remains one of my favourite FTSE 100 shares, and I’m sorely tempted by today’s low valuation.
A company with pricing power
Real estate investment trust Segro (LSE: SGRO) doesn’t always get the limelight. Yet it’s the third-best performer among FTSE 100 shares measured over five years. It delivered a total return of 223% and continues to race along, up 37.9% over the last 12 months.
Segro owns, manages and develops modern warehousing and light industrial property, and recently reported a strong first quarter. Total new headline rents signed during the period jumped to £25m, up from £18m last year,
Supply chain and inflationary pressures could hamper its construction plans and drive up costs. Yet management reckons it can pass this to customers in higher rents. Today’s yield may look low at 1.79% but board recently hiked its full-year dividend by 10%. Further progression seems likely. The downside is that the stock is expensive, at 41.8 times earnings. That’s the price investors pay for buying market-beating FTSE 100 shares like this one.
I wouldn’t buy Ocado, but I would place Segro on my watchlist. Of these three FTSE 100 shares, dirt-cheap Anglo American is the one I’d buy today.