Since 30 December, the FTSE 100 index is up a respectable 3.8%, or roughly 1.3% a month. That’s double its long-term monthly average of less than 0.6% over the last 20 years.
But this positive return masks plenty of volatility in 2023 so far. On 16 February, the blue-chip index hit an all-time high of 8,047.06 points. It then plunged as a banking crisis rocked financial markets.
By 17 March, the index had slumped to close at 7,335.40, down over 8.8% from its peak. It has since rebounded and trades at 7,739.59 as I write, up 5.5% in three weeks.
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The FTSE 100’s biggest flops
Of course, some Footsie shares have fared much better than others. For example, 19 FTSE 100 stocks have risen more than 10% in the past three months.
As a veteran value investor, I’m often bargain-hunting for cheap shares whose prices may be temporarily depressed. So I sought out the index’s worst performers over three months.
I found 17 Footsie shares that had lost at least 10% of their value in three months. For the record, these are the three biggest fallers in this period:
| Company | Sector | Three-month change | One-year change | Five-year change |
| Fresnillo | Mining | -19.0% | -3.1% | -37.1% |
| Anglo American | Mining | -26.1% | -35.9% | +61.1% |
| Ocado Group | Retail/tech | -28.8% | -57.5% | -1.4% |
These three losers have seen their share prices plunge by between 19% and 29% in just three months.
What’s more, all three stocks have also lost value over one and five years, with the honourable exception of mining giant Anglo American (LSE: AAL). And it’s this cheap share that caught my eye recently.
I’m angling to buy Anglo
Anglo American is the world’s largest producer of platinum. It also mines copper, diamonds, iron ore, nickel, and metallurgical coal (for making steel).
At the current share price of 2,595.5p, the group is valued at £34.5bn, making it a big FTSE 100 player. However, the stock has bombed since hitting a 52-week high of 4,292.5p on 19 April of last year.
At its 2023 bottom, the Anglo share price collapsed to a low of 2,437.5p on 16 March. How I’d have loved to have bought this stock at this deeply discounted price. Nevertheless, even after bouncing back 158p (+6.5%) from March’s rock-bottom, Anglo shares still look dirt cheap to me.
This share looks undervalued
At current levels, this stock trades on a multiple of 8.8 times earnings, for an earnings yield of 11.4%. That’s a significant discount to the FTSE 100’s figures of 12.1 and 8.3%, respectively.
In addition, this share offers a market-beating dividend yield of 6.3% a year, versus 4% for the Footsie. This cash payout is covered 1.8 times by trailing (historic) earnings, which offers some margin of safety.
That said, experience has taught me that miners’ earnings can very cyclical, driven by boom-bust cycles in commodity prices. And during tough times, even mega-miners cut their dividends. Indeed, Anglo reduced its cash payout in 2015, 2016, and 2020 — and may do so again.
Even so, I aim to buy this FTSE 100 stock for my family portfolio — once I get my hands on some spare cash, that is!
