While the FTSE 100 has risen by 5% over the last year, some of the companies within the index have suffered big falls.
I’ve been taking a look at the biggest FTSE 100 fallers so far in 2022. Are there any bargains on offer for investors ahead of a possible market recovery?
#1: Ocado collapse
Online grocer and warehouse specialist Ocado Group (LSE: OCDO) has fallen by more than 50% since the start of the year. It’s been a painful collapse, but with the company’s international business still growing, is there an opportunity here?
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Ocado’s latest numbers don’t tell a great story. Revenue fell by 4.4% to £1,262m during the first half of this year and the group reported a pre-tax loss of £211m.
UK shoppers are scaling back their online ordering after the pandemic and maybe finding cheap places to shop.
However, it’s the international business that matters here. Ocado is selling its automated warehouse technology to retailers around the world. The company builds the warehouses for its customers and then collects a percentage of future sales.
This business is losing money at the moment. But Ocado’s management believe that future profits could total more than £750m over the “mid term”.
That could make Ocado shares look cheap — one day. Personally, I’m not comfortable with the long timeframe and the company’s continuing losses. I won’t be buying.
#2: Admiral could be a bargain
Shares in FTSE 100 insurer Admiral (LSE: ADM) have fallen by more than 40% so far this year.
A sharp rise in car repair costs is putting pressure on all motor insurers’ profits at the moment. Admiral’s profits are expected to fall by around 25% this year.
The main risk I can see is that competitive pricing in the insurance market will leave Admiral struggling for a while yet.
However, Admiral has a long track record of steady growth. It’s always been highly profitable and very well managed, in my view. I think this will probably still be true in the future.
The latest broker forecasts suggest that Admiral is trading on around 13 times forecast earnings at the moment, with a potential 7% dividend yield.
Although the short-term outlook is uncertain, I think Admiral shares probably offer good value as a long-term investment.
#3: JD Sports needs a new boss
Shares in sportswear retailer JD Sports Fashion (LSE: JD) are still worth 1,750% more than they were 10 years ago. But the company’s share price has fallen by more than 40% so far this year, despite record profits.
What’s knocked JD Sports down so low? The company has run into problems with UK regulators and decided to part ways with long-time boss Peter Cowgill.
JD is still hunting for a new chief executive. But what interests me is that management believes the group can match last year’s record profits this year, despite tougher economic conditions.
If this view is correct, then JD Sports shares could be trading on just 10 times forecast earnings today. That would be cheap, for a market-leading retailer.
I think there’s going to be extra uncertainty and risk until a new chief executive is appointed. But, in my view, this period of limbo might be an opportunity for long-term investors.
