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Since December 30, the FTSE 100 the index is up a respectable 3.8%, or about 1.3% a month. That’s double its long-term monthly average of less than 0.6% over the past 20 years.
But this positive performance masks a lot of volatility in 2023 so far. On February 16, the blue-chip index reached an all-time high of 8,047.06 points. It then plummeted when a banking crisis rocked financial markets.
On March 17, the index plunged to close at 7,335.40, more than 8.8% below its high. It has since recovered and is trading at 7,739.59 as I write, up 5.5% in three weeks.
The biggest flops of the FTSE 100
Of course, some Footsie stocks have fared much better than others. For example, 19 stocks in the FTSE 100 have risen by more than 10% in the last three months.
As a veteran value investor, I often look for bargains on cheap stocks whose prices may be temporarily depressed. So I looked at the worst performers in the index for three months.
I found 17 Footsie shares that had lost at least 10% of their value in three months. For the record, these are the three biggest casualties in this period:
| Company | Sector | three month change | change of a year | five year change |
| fresnillo | Mining | -19.0% | -3.1% | -37.1% |
| Anglo-American | Mining | -26.1% | -35.9% | +61.1% |
| Ocado Group | Retail/Technology | -28.8% | -57.5% | -1.4% |
These three losers have seen their share price fall between 19% and 29% in just three months.
Furthermore, all three stocks have also lost value for one and five years, with the honorable exception of the mining giant Anglo-American (LSE: AAL). And it’s this cheap stock that caught my attention recently.
I’m fishing to buy Anglo
Anglo American is the world’s largest producer of platinum. It also mines copper, diamonds, iron ore, nickel, and metallurgical coal (to make steel).
At the current share price of 2,595.5 pence, the group is valued at £34.5bn, making it a big player in the FTSE 100. However, the stock has soared since hitting a high of 52 weeks of 4,292.5 pence on April 19 of last year.
At its lowest point of 2023, Anglo’s share price collapsed to a low of 2437.5p on March 16. How I would have loved to have bought these shares at this greatly reduced price. However, even after recovering 158 pence (+6.5%) from the March low, Anglo shares still look very cheap to me.
This stock seems undervalued
At current levels, this stock is trading at a multiple of 8.8 times earnings, for an earnings yield of 11.4%. That’s a significant discount to the FTSE 100 figures of 12.1 and 8.3%, respectively.
In addition, this stock offers an above-market dividend yield of 6.3% per annum, versus 4% for Footsie. This cash payout is covered 1.8 times by final (historical) earnings, which provides some margin of safety.
That said, experience has taught me that miners’ earnings can be very cyclical, driven by boom and bust cycles in commodity prices. And in tough times, even mega-miners cut their dividends. In fact, Anglo reduced its cash payment in 2015, 2016 and 2020, and could do so again.
Still, my goal is to buy these FTSE 100 shares for my family portfolio, once I get my hands on some extra cash, that is!
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