These FTSE 100 shares have fallen 30%+ in 2022. Should I buy them for 2023?

Edward Sheldon highlights three FTSE 100 shares that have tanked in 2022. Should he snap them up for his portfolio?

| 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.

British flag, Big Ben, Houses of Parliament and British flag composition

Image source: Getty Images

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.

Right now, the FTSE 100 index is not far off where it was at the start of the year. But this doesn’t tell the full story of the stock market in 2022. Look within the index, and you’ll see that there are many FTSE 100 shares that are down 20%, 30%, or even 40%.

Here, I’m going to highlight three Footsie stocks that are down 30% or more this year. Are they worth buying for my portfolio for 2023?

Value in the FTSE 100

Let’s start with athletic footwear and clothing retailer JD Sports Fashion (LSE: JD). Its share price is down over 40% in 2022.

At current levels, I think this stock looks quite interesting.

Sure, it’s vulnerable to a consumer slowdown. 2023 could be a challenging year for a lot of consumers, with disposable income drying up.

However, right now, the forward-looking price-to-earnings (P/E) ratio here is under 10.

At that multiple, I see value on offer. This is a company that’s benefiting from a number of trends including the casualisation of fashion and the increasing focus on health and wellness. It’s also a company with a great long-term growth track record.

One risk that does concern me a little is that brands could potentially cut JD out and sell directly to consumers. Nike has recently been doing this with Footlocker.

Overall, however, I think the stock looks attractive. I’m very tempted to have a nibble.

Low P/E ratio

Next up is housebuilder Taylor Wimpey (LSE: TW). It’s also down over 40% year to date.

Now, this stock does look cheap right now. Currently, the forward-looking P/E ratio is only about five.

However, I think 2023 is likely to be a tough year for the housebuilders due to economic conditions.

I’m not the only one with this view. Recently, BofA Global Research said that it expects 2023 to be the most challenging year for UK housebuilders since the 2008/09 Global Financial Crisis.

On the back of this outlook, it double downgraded Taylor Wimpey shares from ‘buy’ to ‘underperform’.

It’s worth noting that in past recessions, Taylor Wimpey has cancelled its dividend.

In light of the risks here, I’m happy to pass on this stock.

Benefiting from higher interest rates

Finally, we have investment platform operator Hargreaves Lansdown (LSE: HL). It’s down nearly 40% this year.

This is another stock that I think looks interesting at current levels. The valuation and the dividend yield here are attractive, in my view. Currently, the forward-looking P/E ratio is a little over 15, while the yield is near 5%.

Meanwhile, the company is benefiting from higher interest rates. The higher rates go, the more interest it can generate on customers’ cash deposits. With UK interest rates predicted to top 4% in 2023, its profits should get a big boost.

A key risk here is stock market weakness. If markets fall, profits will be impacted. Competition from new investing start-ups such as Freetrade is another risk.

Overall though, I think the risk/reward is attractive. I already own a few Hargreaves Lansdown shares. However, I’m seriously considering buying a few more for 2023 and beyond.

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.

Edward Sheldon has positions in Hargreaves Lansdown Plc and Nike. The Motley Fool UK has recommended Hargreaves Lansdown Plc and Nike. 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.

More on Investing Articles

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Here’s my 5-step approach to earning passive income of £500 a month

Christopher Ruane explains the handful of steps he uses to target hundreds of pounds in passive income each month.

Read more »

Investing Articles

2 UK shares I’ve been buying this week

From a value perspective, UK shares look attractive. But two in particular have been attracting Stephen Wright’s attention over the…

Read more »

Investing Articles

A lifelong second income for just £10 a week? Here’s how!

With a simple, structured approach to buying blue-chip dividend shares at attractive prices, our writer's building a second income for…

Read more »

Investing Articles

Here’s how I’d use a £20k Stocks and Shares ISA to help build generational wealth

Discover how our writer would aim to turn a £20k Stocks and Shares ISA into a sizeable nest egg by…

Read more »

Investing Articles

Billionaire Warren Buffett just bought shares of Domino’s Pizza. Should I grab a slice?

Our writer takes a look at a few reasons why Domino's Pizza stock might have appealed to Warren Buffett's Berkshire…

Read more »

Yellow number one sitting on blue background
Investing For Beginners

My number 1 tip for Stocks and Shares ISA investors

This strategy has improved Edward Sheldon’s ISA returns dramatically and he thinks it could help other investors have more financial…

Read more »

White female supervisor working at an oil rig
Investing Articles

Down 20% in a year, is the BP share price simply too cheap to ignore?

After sliding for months, is the BP share price as low as it'll go? Even with the risk of more…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

4,123 shares of this UK dividend stock could get me £206 a month in passive income

Despite cutting its dividend significantly over the past five years, I think this FTSE 100 stock could be a good…

Read more »