The spooky season is upon us. So what better time to remind myself that there are some FTSE 100 shares that continue to look like horror stories?
Here are three I’d refuse to buy if you paid me.
Blue sky stock
I’ve long been unable to see the appeal of Ocado (LSE: OCDO) shares. That’s despite the company multi-bagging in value between 2017 and 2021.
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Unfortunately, these gains have now evaporated. In fact, I’d have a paper loss of over 80% if I’d invested when the share price hit a record high.
The problem here isn’t the company’s tech offer, as such. Ocado’s Customer Fulfilment Centres — warehouses built for companies it has partnered — are a sight to behold. The problem is that they take an awfully long time to build and roll out. In the meantime, the business fails to make a profit, giving it a ‘jam tomorrow’ whiff that you usually find in small-cap stocks.
This is not to say a recovery is impossible. Persistent rumours that Amazon is preparing a bid have sporadically boosted the share price.
But nothing has come to pass, so far. And with brokers growing increasingly worried about subdued growth in its retail arm, I wouldn’t be surprised if the firm falls out of the FTSE 100.
Tricky outlook
British Airways owner International Consolidated Airlines SA (LSE: IAG) is another horror story, as far as I’m concerned.
Granted, some of this is not the company’s fault. The pandemic ravaged the travel industry as planes were grounded and people were forced behind closed doors.
On a positive note, there’s clear evidence trading has returned to form. IAG beat forecasts in Q3, due to strong demand over the summer months. Operating profit before exceptional items jumped 39% to €1.75bn.
What’s interesting however, is that this news didn’t put a rocket under the share price. Clearly, some investors are still unnerved by the impact of political and economic uncertainties going forward.
In the meantime, a significant debt pile means the firm isn’t paying any dividends. Competition in this space remains intense too.
With so many great FTSE 100 companies trading on historically low valuations and paying out cash to their holders, I can’t be tempted here. That’s despite the shares changing hands for an exceptionally low price tag of four times forecast earnings.
Debt-heavy
Speaking of dividends, completing my trio of stocks I’m pushing away with a bargepole is perennial income investor favourite Vodafone (LSE: VOD).
This ongoing popularity isn’t hard to fathom. The shares currently yield 9.2%, based on analyst estimates — well over double what I’d get from a fund that simply tracked the FTSE 100.
The issue is that this is only expected to be just about covered by FY24 profit. Therefore, I wouldn’t be surprised if new(ish) CEO Margherita Della Valle opted to reduce the dividend to shore up cash.
Like IAG, the company is also loaded with debt. This looks likely to only get worse if the firm’s merger with Three (and plans to invest £11bn in building a 5G network) is given the green light.
And then there’s the performance of the share price. Vodafone’s have halved in value in five years. If that’s not the definition of a value trap, I’m not sure what is.
