January was a tough month, with investors getting their first whiff of a stock market correction since March 2020’s meltdown. The US S&P 500 index lost 5.3% last month. The tech-heavy Nasdaq Composite index fared even worse, losing 9% in January. However, the UK’s FTSE 100 index shrugged off worries over pricey US stocks. Indeed, the Footsie added almost 80 points in January, rising 1.1%. As I write, the FTSE 100 stands at 7,542.93 points, up almost 2.2% in 2022. But not all Footsie stocks did well last month.
FTSE 100 winners and losers in January
Though the FTSE 100 rose by 1.1% in January, individual shares’ returns within the index were widely dispersed. This is to be expected, with some stocks doing far better than others. In January, 40 of the 100 shares rose in value. Gains among these 40 winners ranged from 20% to 0.1%, with the average rise being 5.6%. At the other end of the scale lie 60 FTSE 100 losers. Declines among these 60 losers ranged from 0.5% to a brutal 28.8%, with the average loss being 9.6%.
The Footsie’s five biggest fallers
As a veteran value investor, I delight in hunting for ‘fallen angels’. These are otherwise sound FTSE 100 businesses whose share prices have taken a battering lately. In my experience, yesterday’s dog stocks can become tomorrow’s star shares (and vice versa). That’s why I often rummage around in Mr Market’s bargain bin, looking for deeply discounted cheap shares. For the record, these five shares were the biggest fallers in the FTSE 100 in January:
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| Company | Industry | January change |
| Scottish Mortgage Investment Trust | Technology fund | -19.5% |
| Croda International | Speciality chemicals | -21.3% |
| Dechra Pharmaceuticals | Veterinary products | -21.4% |
| Halma | Safety equipment | -22.2% |
| Fresnillo | Precious metals | -28.8% |
As you can see, losses among these five losers range from almost 20% at Scottish Mortgage Investment Trust to nearly 30% at Fresnillo (LSE: FRES). The average decline across all five slumpers is 22.7%. Ouch.
Which of these flops would I buy today?
I definitely would not buy Scottish Mortgage Investment Trust today, as I explained yesterday. Likewise, three of the remaining four fallers don’t particularly grab me or catch my eye. The FTSE 100 flop that stands out to me is Fresnillo.
Fresnillo has been listed in London since 2008, but is also quoted on the Mexican Stock Exchange (Bolsa) and headquartered in Mexico City. The company is the world’s largest producer of primary silver (silver from ore) and Mexico’s second-largest gold miner. Its flagship mine has been operating for almost 500 years. Currently, Fresnillo has seven operating mines, three development projects, and six exploration prospects. In 2020, this FTSE 100 miner produced 53.1m ounces of silver and nearly 770,000 ounces of gold.
Of course, Fresnillo’s cash flow, profits, and earnings are driven by the prices of silver and gold. Both have declined over the past year. As a result, this FTSE 100 stock has been very volatile in 2021-22. A year ago, Fresnillo shares hit a 52-week high of 1,193.5p on 1 February 2021. Yesterday, they hit a 52-week low of 612.6p, before rebounding to close at 624.8p.
As I write, Fresnillo is up strongly, trading at 657.4p after leaping 32.6p (5.2%) today. This values the miner at £4.8bn. Today, FRES trades on a price-to-earnings ratio of 10.6 and an earnings yield of 9.4%. The dividend yield of 3.6% a year is slightly below the FTSE 100’s 4%. This looks too cheap to me. I don’t own Fresnillo, but I’d buy today. However, I’d expect an equally volatile ride in 2022-23!
