The past year has been positive for the FTSE 100 index, but not all of its members have shared the good fortune. Over the past 12 months, the Footsie has added almost 1,020 points to stand at 7,042.20 as I write. That’s a decent return of more than a sixth (16.9%). Adding in dividends takes this figure to 20%-ish — a very respectable return for UK stocks. But some Footsie shares have plunged in value since mid-September 2020.
The FTSE 100’s losers
The FTSE 100 index includes 101 stocks, as one is dual-listed. Of these 101 stocks, 85 have climbed in value over the past 12 months. These gains range from 118.0% to 0.4%. Across these 85 winners, the average gain is more than a third (+35.5%). As this figure includes no losers, it is slightly more than double the wider index’s capital return. At the other end of the scale, we have 16 losers. Losses from these FTSE 100 laggards range from 0.8% to almost two-fifths (37.6%). The average decline across these losers was roughly a seventh (-14.1%). That’s 31 percentage points below the wider index’s capital return. Ouch.
Looking at the 16 losers, I spotted a few sectors that have underperformed the FTSE 100. For example, my list of laggards includes four pharmaceutical/healthcare companies, three financial firms, two consumer-goods giants, and two go-go growth/tech stocks. But the last two places — #100 and #101 — are both taken up by mining companies.
This Footsie loser might be a steal
As a veteran value investor, I often rummage in the FTSE 100’s bargain bin, hunting down cheap shares. After this exercise, I decided to take a closer look at the Footsie’s worst performer over 12 months. This unwanted award goes to Fresnillo (LSE: FRES), whose shares have crashed by almost two-fifths (37.6%) since mid-September 2020.
Although Fresnillo is a London-listed company, it is also quoted on the Mexican Stock Exchange (Bolsa) and is headquartered in Mexico City. The group, established in 2008, is the world’s largest producer of primary silver (silver from ore) and Mexico’s second-largest gold miner. Incredibly, its flagship mine has been in operation for over 500 years. Currently, Fresnillo has seven operating mines, three development projects, and six exploration prospects. In 2020, this FTSE 100 precious-metals miner produced 53.1m ounces of silver and 769.6 thousand ounces of gold.
Of course, Fresnillo’s future cash flow, profits, earnings per share, and cash dividends are strongly tied to the price of silver (and, to a lesser degree, gold). Hence, when the prices of silver and gold weaken, so too does this FTSE 100 firm’s earnings. Over the past 12 months, the Fresnillo share price has ranged from a 52-week high of 1,379.5p on 21 September 2020 to a low of 742.6p on 27 July 2021. Today, the share price of 839.4p is just over an eighth (+13.0%) above this low. To me, this suggests that this FTSE 100 stock might still be in bargain territory.
At the current share price, Fresnillo is valued at £6.2bn. Its shares trade on a price-to-earnings ratio of 14.0 and an earnings yield of 7.1%. Also, they offer a dividend yield of 2.8% a year, roughly one percentage point below the FTSE 100’s 3.8% a year. To me, these fundamentals look fairly cheap. Though I don’t own FRES at present, I’d buy at these price levels. Then again, history has taught me that mining stocks can be very volatile and unpredictable. Hence, I’d expect owning this FTSE 100 stock to be a roller-coaster ride at times!
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Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has recommended Fresnillo. 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.