Investors who get lucky and buy growth stocks before they rocket can make fortunes, but timing these things is never easy.
The following 2 FTSE 100 stocks have had a rough time and I’m tempted to buy both before they (hopefully) recover.
International sports betting and gambling company Entain (LSE: ENT) is the second-biggest loser on the FTSE 100 over 12 months, crashing 48.31%. Only Burberry’s 68.73% near-wipeout has been worse. Over three years Entain is down 66%. That seems harsh to me.
The stock jumped almost 10% on 8 August after reporting an 8% jump in first-half net gaming (NGR) revenues to £2.6bn, boosted by the Euros football tournament. Management also lifted full-year NGR growth forecasts while underlying cash profit rose 5% to £524m.
Entain is finally winning
Hardly spectacular but enough to kickstart the beaten-down Entain share price. I decided to take a punt once the early excitement ebbed, as it often does. Not this time though. The stock is up 14.33% in the last week.
On 2 September gaming industry veteran Gavin Isaacs takes charge and investors are hoping for stability after predecessor Jette Nygaard-Andersen’s wild acquisition spree.
Entain now has US exposure via its 50:50 BetMGM joint venture with MGM Resorts International. It’s had to invest heavily to get things moving but that could soon start to pay off, especially if the US avoids a recession.
Entain is still relatively cheap, trading at 14.05 times earnings. It was cheaper on Monday (12 August) though, at 11.85 times. The danger with buying today is that the slightly more upbeat outlook is now reflected in the price. The shares could idle until the next set of positive news.
Despite that danger I’ll add it to my portfolio when I have the cash, then wait for its bearish run to turn bullish.
Prudential needs a break
Insurer Prudential (LSE: PRU) was supposed to be a brilliant play on emerging Asia but it’s had a torrid run. Its shares have crashed 32.96% over 12 months, making it the FTSE 100’s third-worst performer. Over three years, it’s down 55%.
The Prudential share price has been hammered by the troubled Chinese economy, which has been hit by everything from a property crash to stringent Covid lockdowns and fears over a trade war with the West.
The shares are now dirt cheap trading at 9.46 times earnings, well below the average FTSE 100 valuation of 15.3 times. That’s a “deeply discounted” multiple, according to broker Jefferies.
Yet first-quarter results were “robust”, with new business profit up 11% to $810m. Prudential’s Hong Kong, Singapore and Malaysia markets performed well, although Indonesia trailed. The insurer’s ‘Growth Markets and Other’ segment, which covers Thailand, Taiwan, India, and Africa, is doing nicely.
That still leaves the problem of China. I’m already exposed to the country via my Glencore holding, and buying Prudential feels like doubling down on the same macroeconomic and geopolitical risk. Prudential publishes half-year results on 30 August and I think its shares could fly once market sentiment shifts. Entain may have already started its bull run so I’ll buy that first.
