This ‘dying’ FTSE 100 share is up 53% in 6 months. I like the stock!

The FTSE 100 has jumped 10% in 2021, but this unloved Footsie stock has soared 53% in six months. I think that shareholders could have more to celebrate…

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

It’s been a good 2021 for the FTSE 100 index. As I write, the Footsie hovers around 7,108.34 points, gaining more than 640 points in 2021. The index has risen almost a tenth (9.9%) since the end of 2020. However, returns have varied widely over the past six months among the index’s members.

FTSE 100: winners and losers over six months

Of 101 FTSE 100 shares (one stock is dual-listed), 82 are up over the past six months. This shows the breadth of the market recovery since winter’s lows. Among these 82 winners, gains range from 78.1% to a tiny 0.1% (just the sort of widely dispersed results I’d expect to see). The average uplift among these gainers is 15.8% — almost six percentage points higher than the index return. This leaves us with 19 FTSE 100 losers, with losses ranging from 1.8% to an unpleasant 29.3%. The average loss among these decliners was 6.9% — almost 17 percentage points behind the Footsie’s near-10% gain.

The Footsie’s five stars

Here are the FTSE 100’s five best performers over the six months since 29 December 2020:

Should you invest £1,000 in ITV right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if ITV made the list?

See the 6 stocks

Royal Mail (Postal service) +78.1%
Entain (Betting and gambling) +59.4%
Ashtead Group (Equipment hire) +57.0%
BT Group (Telecoms) +53.0%
Kingfisher (Retailer) +37.0%

Gains among these champion shares range from 78.1% at the Royal Mail to 37% at DIY retailer Kingfisher. Among these five FTSE 100 winners, one share in particular stands out for me. That company is BT Group (LSE: BT.A), whose shares I’ve watched closely in 2021.

BT booms in 2021

I’ve written about BT often since February, when I decided that this FTSE 100 share was undervalued. On 9 February, the BT share price dropped to its 2021 intra-day low of 120.45p, before closing at 122.15p (its 2021 closing low). As I write, the shares trade at 200.6p. That’s a gain of over 80p from the 2021 low point, for an uplift of almost exactly two-thirds (66.5%).

More recently, I have continued to argue that BT shares are underrated. On 13 May, I said that “I would buy BT shares at their current levels” with the share price at 160p. Since then, this FTSE 100 stock has leapt by more than a quarter (25.4%). That’s a great gain in one-and-half months. Also, here’s BT price performance over timescales ranging from one month to five years:

1M +15.9%
3M +40.5%
6M +53.0%
1Y +73.6%
2Y +3.9%
3Y -5.8%
5Y -53.6%

In the short-term, BT shares have been a cherry, rising strongly over four periods up to one year. But they’ve also been a long-term lemon, down nearly 6% over three years and collapsing by more than half (53.6%) over five years. Furthermore, this FTSE 100 stock is £3 lower today than the £5 heights hit in November 2015.

What do I like about BT today? First, the company has restored its cash dividend. The initial yearly payment of 7.7p a share works out at a dividend yield of 3.8%, slightly higher than the FTSE 100’s yield. Second, BT’s contributions to its huge pension deficit are set to fall by £300m a year from mid-2024. Third, Ofcom’s Wholesale Fixed Telecoms Market Review was regarded as being favourable to BT. What don’t I like? Well, BT had a pretty gruesome record of corporate governance and performance in recent years, including an accounting fraud in Italy. Also, it has to spend many billions upgrading the UK’s broadband network. Although I don’t own this FTSE 100 stock today, I would be happy to buy and hold at the current BT share price.

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Cliffdarcy does not own shares in BT Group. The Motley Fool UK has no position in any of the shares mentioned. 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.

Our best passive income stock ideas

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

US Trade Barrier Tarrif as American Economic Protectionism
Investing Articles

How will Trump’s tariffs impact my Stocks and Shares ISA?

This writer has been taking a look at the holdings in his Stocks and Shares ISA to determine which are…

Read more »

Middle-aged white man pulling an aggrieved face while looking at a screen
Investing Articles

Is Tesla stock about to crash? Here’s what the charts say

Tesla stock has demonstrated incredible volatility in recent months, but there will almost certainly be more to come. Dr James…

Read more »

Businessman hand stacking up arrow on wooden block cubes
Investing Articles

5 AIM stocks to consider buying for the long term

We asked our writers to share their best AIM-listed stocks to consider buying, featuring five very different businesses.

Read more »

Road 2025 to 2032 new year direction concept
Investing Articles

Is the Rolls-Royce share price still undervalued in 2025?

After massive growth in the Rolls-Royce share price, Charlie Carman considers whether the FTSE 100 aerospace and defence stock is…

Read more »

Businessman hand flipping wooden block cube from 2024 to 2025 on coins
Investing Articles

How an investor could target a £43k lifelong passive income starting with just £5 a day

Harvey Jones says it's possible to build a high-and-rising passive income by investing small, regular sums in FTSE 100 shares.…

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

£10,000 invested in Lloyds shares on 7 April is already worth…

After a dip in early April, Lloyds shares are back to their 30%+ year-to-date gain in 2025. And analysts are…

Read more »

Tariffs and Global Economic Supply Chains
US Stock

What I’d look to buy as the US stock market heads for the worst month since 1932

Jon Smith sifts through the US stock market to try and find some ideas that have fallen in value recently…

Read more »

Businessman hand stacking up arrow on wooden block cubes
Growth Shares

Prediction: I think £1,000 invested in this UK stock could double by 2030

Jon Smith runs through a FTSE 250 stock with a market cap just over £1bn that he feels has the…

Read more »