1 overlooked FTSE 100 stock that’s due an imminent comeback
The photo used in this section was obtained from Getty Images.
Whenever you put your money into investments, you need to be aware that there is a chance your capital could be lost. This means that the total value of the investments you make could decrease, resulting in less money than you originally invested being returned to you.
The information in this article is only given to provide knowledge and is not intended to be taken as personal guidance. Putting money into a currency that is different than sterling presents a possibility of currency exchange risks. The exchange rates between currencies fluctuate constantly which could impact the investment value in terms of sterling. Even if the stock price goes up in its original currency, you might still lose money in sterling. If you invest in stocks that are listed on foreign exchanges, you may be charged additional fees when you buy or sell them, and different tax implications may arise. Also, they may not offer the same kind of regulatory safeguards as UK stocks.
This post is freely accessible and contains personal views that might contrast with those of The Motley Fool's Premium Investing Services. If you become a member of Motley Fool, you'll have access to our professional analyst recommendations, comprehensive research, and resources to aid you in your investing journey. Discover further by signing up today.
The FTSE 100 is a group of the biggest companies listed in the UK based on their market value. Despite being massive corporations, investors may sometimes miss out on some of their stocks. This could happen if they lose popularity or are not part of the trending industry. I have identified a situation where this has occurred and believe that it presents a great buying opportunity.
Wrongly Ignored: Why It Matters
Severn Trent is responsible for providing water services to a plethora of households and businesses in the United Kingdom. They play a pivotal role in the lives of many individuals as they are an essential utility provider.
In the previous twelve months, the stock has experienced a decrease of 17%. This weak showing is a contributing factor to why I reckon it hasn't grabbed the attention of certain investors who seek expansion. Nonetheless, upon examining the reasons behind the financial dip, I don't find it particularly problematic.
To give an instance, the PBIT (profit before interest and tax) of the group reached £508.8m in 2023 which demonstrated a rise from the previous year's £506.2m. Furthermore, the headline turnover saw a rise from £1.94bn in 2022 to £2.16bn. However, there was some apprehension expressed over heightened operating expenses that were influenced by the surge in energy costs and wages in addition to extra investment required to prevent flooding.
Everyone is experiencing higher energy prices, not just Severn Trent. Additionally, investing more in flood prevention shouldn't be seen as a negative thing. Actually, it could end up saving the company money in the future!
Some investors may worry about the recent penalty of £2 million linked to the release of untreated wastewater into the Trent River. Although this took place some time ago, it presents a negative image for the company and the subject of sewage discharge has become a looming problem for the entire water utility industry.
Possible Comeback On The Horizon
I understand why investors might dismiss a tedious utility stock that has fallen behind the FTSE 100 index in the last year. Many more captivating shares related to popular trends like artificial intelligence (AI) or electric vehicles (EVs) seem more enticing.
I believe that the upcoming year may be a good time for this matter due to a number of factors. Firstly, it is important to bear in mind that the economy of the United Kingdom is currently facing a recession. If interest rates do not decrease over the course of this year and inflation continues to rise slowly, it is possible that investors may become anxious.
During times of uncertainty, investors may tend to gravitate towards utility stocks as a safer investment. This is a common occurrence since people tend to move away from high-risk growth stocks towards options that they perceive as being more secure.
One thing to think about is the amount of money you could earn with a dividend. Severn Trent's current dividend yield is 4.56%, which is higher than the average for other companies in the FTSE 100. Because Severn Trent has a reliable history of paying out dividends for over ten years, this could be appealing to people who want to earn regular income from their investments.
It's possible that I'm mistaken. Should the UK economy experience an upswing, other companies with higher growth potential might be preferred over Severn Trent, causing it to be ignored. That is a possibility worth considering. Despite this risk, I am contemplating adding Severn Trent to my portfolio as a safeguard in the event that things downturn at a later point in the year.
Exploring Beginner Investing Options
"Achieving A £52,920 Secondary Income With A £20k ISA Investment."
On the 7th of April in the year 2024, Ben McPoland wrote a blog post.
The author describes their strategy for using compound interest within a Stocks and Shares ISA to attain a substantial return on investment.
Building Wealth With Warren Buffett's Teachings, Despite No Savings
On April 7th, 2024, Dr. James Fox wrote a blog post.
Warren Buffett is considered as one of the most efficacious investors ever. We have a lot to gain from his lessons, despite the fact that…
One FTSE 100 Stock Possibly Up For Acquisition
On April 7th, 2024, the writer Stephen Wright published a blog post.
Stephen Wright is concerned about Burberry's potential departure as the shares have plummeted by 53% within the past year.
"Why Investing Early In Stocks & Shares ISA Yields BIG Rewards!"
On the 7th of April in the year 2024, Royston Wild wrote a blog section.
Investing our money in a Stocks and Shares ISA can make a significant difference for investors in UK shares. Furthermore...
Consider These 3 Passive Income Dividend Stocks In April
On the 6th of April, 2024, this blog was written by Kevin Godbold.
According to my opinion, these shares have ample scope to serve as long-lasting passive income options within a varied investment portfolio.
"FTSE 250 Potential Takeover Target"
On the 6th of April in the year 2024, Stephen Wright wrote a piece for his blog.
The owner of a significant share in Dr. Martens has advised the FTSE 250 company to contemplate a potential sale. Stephen Wright - a highly influential figure within the company - has made this suggestion.
"My Investment Strategy For A New Stocks And Shares ISA With £20k"
On April 6th, 2024, Ben McPoland wrote a blog post.
In this blog, our author shares a plan he would use for a fresh Stocks and Shares ISA account and also recommends a good beginner's FTSE option.
Creating A Second Income With Surplus Salary: Tips For Those With No Savings
On the 6th of April in the year 2024, the author of this blog post, Dr. James Fox, wrote about a particular topic.
For a lot of people, having a supplementary source of income can seem like an unrealizable fantasy. However, it is actually achievable if we adhere to a…
We've taken steps to make sure the information we share in The Motley Fool Ltd is correct when we publish it. The opinions expressed are only those of the authors. We didn't consider the unique situations of any particular person or group, so nothing we share here counts as personal advice or a personal recommendation. Don't depend on what we say when making your choices. If you want personal guidance, go talk to an independent, qualified financial adviser. We don't accept any responsibility for any harm or disadvantage anyone suffers as a result of what they decide based on our content. We also want to remind you that sharing information isn't something the government regulates.
Investing in stocks, shares, and receiving dividend income is not a sure thing. The value of your investment may go down as well as up, and there is no guarantee that you will get back what you put in. It is important that you do not invest more than you can afford to lose and that you don't depend on that income to meet your expenses. If you invest in stocks in other countries, there may be extra charges, taxes, and different accounting and reporting standards involved. There may also be tax implications and less regulatory protection. The value of these stocks may also be affected by exchange rate charges, which means that their value may decrease in sterling even if their price increases in their original currency. Any performance statistics that do not take into account changes in exchange rates are not an accurate indication of your return on investment.
The Motley Fool Ltd and Fool are two trading names used by the company The Motley Fool Ltd. This company is designated by Richdale Brokers & Financial Services Ltd as a representative and is authorized and monitored by the Financial Conduct Authority (FCA) (FRN: 422737). Our focus is to offer details, thoughts, and evaluations concerning financial products and services, such as consumer credit products, loans, mortgages, insurance, savings, and investment products and services. This also includes the products and services presented by our partners who are affiliates of our company.
The headquarters of Motley Fool Ltd is located at 5 New Street Square in London with the postcode EC4A 3TW. It is registered as a company in England and Wales and has been assigned the company number 3736872. Additionally, its VAT number is 188035783.
The content of this blog is the intellectual property of The Motley Fool, a company that has been registered since 1998. Any unauthorized use of their trademarked name and logo is prohibited.
