This solid FTSE 100 share has dived 10.4% in three months. I’d buy it today!

This solid FTSE 100 share has dived 10.4% in three months. I’d buy it today!

The Motley Fool  | Aug 14, 2020 15:40

This solid FTSE 100 share has dived 10.4% in three months. I’d buy it today!

On Thursday evening, the FTSE 100 index closed down 94.5 points (1.5%) at 6,185. This followed a four-day gain of 4.7% from Friday to Wednesday. These are the dangerous dog days of August.

The FTSE 100 is up 4.8% in three months From 13 May to 13 August, the FTSE 100 climbed over 280 points (4.8%). Not bad, given we were locked down for two of these months. But the big gains came from 23 March to 29 April, when the index surged 1,120 points (22.5%).

As an index, the FTSE 100 measures the aggregate value of its 101 members. (It’s 101, because Royal Dutch Shell (LON:RDSa) has two UK-listed shares.) Of course, some of its shares have done far better than others.

Some FTSE 100 shares have soared In the three months to 13 August, returns from FTSE 100 shares were very widely dispersed. Indeed, the difference in returns between the ‘best’ and ‘worst’ share is almost 95 percentage points.

Top performer is Mexican miner Fresnillo (LON:FRES) (+78.3) and then British retailer Kingfisher (LON:KGF) (+61.7%). Including these two, there are eight FTSE 100 shares up 40% or more in three months.

Next come 13 FTSE 100 shares up by 30% to 40%, followed by 24 shares up 20% to 30% – all easily beating the index’s 4.7% return.

Next are 23 stocks up 10% to 20% in three months and then 21 shares with single-digit positive returns. In total, that comes to 89 FTSE 100 shares with gains over the three months to 13 August.

Huh? How can this be correct? Therefore, only 12 FTSE 100 shares fell over in the three months to 13 August. These fallers were down from 0.2% to 16.7%. Hence, there are no really massive losers at the bottom of this table.

But how on earth can 89 shares be up and only 12 stocks be down, yet the index has risen a mere 4.8%? The answer is the FTSE 100 is an index weighted by market value. Thus, the bigger the company, the more its share-price moves affect the wider index.

The big beasts have struggled Using a simple, unweighted average, the FTSE 100 index would be ahead by 18.2%, not the actual 4.8% recorded. That’s because so many index heavyweights have seen share-price declines during this period.

By heavyweights, I mean massive, global businesses such as drug firms AstraZeneca and GlaxoSmithKline. Other fallen giants include drinks behemoth Diageo (LON:DGE), supermarket Goliath Tesco (LON:TSCO), and tobacco leaders British American Tobacco (LON:BATS), and Imperial Brands (LON:IMB).

HSBC is my pick of the fallen giants One other ‘fallen giant’ remains: global mega-bank HSBC Holdings (LSE: LON:HSBA) (down 10.4% in three months). This banking stalwart lends heavily in East Asia, particularly in Hong Kong and China. That’s why its shares have been hammered by the ‘double whammy’ of Covid-19 and deteriorating US-China relations.

Currently hovering around 340p, HSBC shares have almost halved (down 43.6%) over the past year. Furthermore, they are less than 6.5% above their 52-week low around 320p, set on 3 August. Yet, on 11 September last year, HSBC shares peaked at 633.5p. That’s almost double their current level.

Today, HSBC is valued at £69.8bn, which is a fraction of the valuation of big global banks with similar size, scale, and scope. To me, that’s crazy. Hence, I’d buy HSBC today and hold this FTSE 100 share for capital growth and the return of chunky dividends!

The post This solid FTSE 100 share has dived 10.4% in three months. I’d buy it today! appeared first on The Motley Fool UK.

Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has recommended HSBC Holdings. 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.

Motley Fool UK 2020

First published on The Motley Fool

Related News

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (India) English (Canada) English (Australia) English (South Africa) English (Philippines) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 简体中文 繁體中文 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
Saving Changes


Download the App

Get free real time quotes, charts and alerts on stocks, indices, currencies, commodities and bonds. Get free top of the line technical analysis/predictors. is better on the App!

More content, faster quotes and charts, and a smoother experience is available only on the App.