We’ve just had third-quarter updates from three FTSE 100 shares that I’ve been watching for some time. Two of them have fallen over the past 12 months, but all three look like they might be long-term buys to me.
Media
First up is WPP (LSE: WPP), whose share price has lost 20% over 12 months.
The advertising and PR group spoke of a strong Q3 performance, posting a 10.3% rise in revenue. On a like-for-like basis, revenue gained a more modest 2.7%. The company attracted $1.7bn in new business in the quarter, and $5.1bn year-to-date.
WPP has been active on the acquisition front too, most recently buying Passport, a brand design agency in California. On top of WPP’s planned £800m share buyback in 2022, it seems there’s no shortage of cash available.
Forecasts suggest a dividend yield of around 4.5% this year. Looking at a forward price-to-earnings (P/E) ratio of under 10, I find that attractive. We do face big economic risks, though. So I might wait and see how the final quarter goes.
Silver
Fresnillo (LSE: FRES) is the world’s largest silver miner. And its shares have also fallen 20% over 12 months.
Q3 silver production dropped by 5.4%, but that was expected. And over nine months, volumes increased by 2.6%.
Fresnillo also unearths gold, lead, and zinc. Production volumes of those are all down year-to-date, which might be contributing to the share price weakness.
But the company reckons it’s still on track to meet full-year guidance for its two key precious metals. It expects silver production of 50.5 to 56.5 moz of silver, and 600 to 605 koz of gold.
My biggest concern with Fresnillo as an investment right now is the stock valuation. We’re looking at a fairly lofty P/E of around 28. But forecasts have it falling to 18 in a couple of years. And I think that would be cheap compared to Fresnillo’s long-term prospects. I think I’ll wait, and hope for further future dips.
Household goods
Household goods producer Reckitt (LSE: RKT) has seen its shares gain 9% over the past 12 months.
Q3 revenue is up 14%. And reported year-to-date revenue rose 7.6%. Like-for-like (LFL) revenue is a bit better, up 8.2%.
The company has set a full-year LFL revenue target of between 6% and 8%, narrowing its earlier estimated range. Reckitt is also targeting adjusted operating margins in the mid-20s in the medium term, and says it’s on track to achieve it. For a highly competitive retail segment, I think that would be impressive.
There’s a forecast P/E of around 16-17, dropping to 15 by 2024. That’s on the upper side of the FTSE 100’s long-term average valuation. But Reckitt has a highly defensive position, and I think it’s worth it for the safety margin.
In other circumstances, I could buy Reckitt at this valuation. I just see better bargains around right now, albeit with a bit more risk.
