Image Alt

The Investing Box

  /  Editor's Pick   /  These 2 FTSE 100 shares are on sale this week!

These 2 FTSE 100 shares are on sale this week!

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.

After a bright start to the week, FTSE 100 shares took a bit of a beating on Thursday and Friday. This followed worrying news about two mid-sized Californian banks teetering on the brink of failure.

Shares slide

As a result of this latest bout of investor nervousness, the FTSE 100 is down 2.5% this week. Of course, some shares sold off more than others in this latest market dip. Here are two that took a harder hit than most this week.

Faller #1: Ocado Group

The worst performer was Ocado Group (LSE: OCDO). Shares in the online supermarket and provider of logistics technology plunged by 14.3% in five trading days, ending the week at 451.1p.

This latest steep slide leaves Ocado stock down by 61.9% over the past year. Ouch! Also, this one-time growth wonder-stock has lost 21.8% of its value over the last five years.

Then again, Ocado shares are still well above their 52-week low of 380.3p, hit on 13 October last year. But they’re also far, far short of their 52-week high of 1,316.5p, hit exactly a year ago.

Today, this firm is valued at a mere £3.7bn, pushing it into the FTSE 100’s relegation zone to be demoted at the next quarterly reshuffle. And in 23 years of trading, Ocado has burned through £1.5bn of cash and yet is still barely profitable.

I don’t own Ocado shares — and it’s for the two reasons above that I won’t catch this ‘falling knife’ by buying this stock.

However, I could well be wrong and Ocado shares could stage yet another comeback — especially if it keeps signing big licensing deals with overseas grocery chains. Nevertheless, this volatile stock is too rich for my blood.

Faller #2: Barclays

Barclays (LSE: BARC) was the FTSE 100’s fourth-biggest faller this week, dropping 8.3% to close at 157.42p. This values the Blue Eagle bank at a round £25bn, making it a FTSE 100 stalwart.

This dip leaves shares in the Big Four bank down 0.2% over the past year. Meanwhile, the stock has lost 25.9% of its value over the last five years.

For the record, I’m about as bullish on Barclays as I am bearish about Ocado. That’s because I regard this FTSE 100 share as a classic value/dividend/recovery play for me as a patient, long-term investor.

Right now, Barclays trades on a price-to-earnings ratio of 5.3 and an earnings yield of 18.9%. To me, these figures suggest that this stock has been hurled into the FTSE 100’s bargain bin. Perhaps investors expect Barclays’ earnings to tumble this year if the UK enters a prolonged recession?

In addition, this bank share offers a market-beating dividend yield of 4.6% a year, versus below 4% for the wider Footsie. Even better, this cash yield is covered a mighty 4.1 times by trailing earnings. To me, this suggests that Barclays’ dividend is both rock-solid and has room to grow.

Then again, bank shares tend to perform poorly during recessions due to rising loan losses. Even so, I’d buy this FTSE 100 share today — if I didn’t already own it!

The post These 2 FTSE 100 shares are on sale this week! appeared first on The Motley Fool UK.

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#FFFFFF”, ‘color’, ‘#FFFFFF’);

More reading

Cliff D’Arcy has an economic interest in Barclays shares. The Motley Fool UK has recommended Barclays Plc and Ocado Group Plc. 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.