The FTSE 100 The UK’s top stock index rose 18% year-over-year, rewarding many investors well. But some FTSE 100 components have fallen on the face of a growing market. Here are two FTSE 100 fillers that I consider offer value and will consider adding to my portfolio.
FTSE 100 Fowler: Smith and nephew
Medical device manufacturer Smith and nephew (LSE: SN) severely outperformed its FTSE 100 peers last year, dropping 18% of its value during this period.
It’s not without reason. The company has seen a significant drop in revenue due to delays in elective surgery. Even now, the company’s orthopedics business sector continues to perform slowly, although revenue in the first half of the pre-epidemic 2019 increased slightly compared to the first half.
However, when the recovery is slowly coming to a close, I think investors have identified Smith and Nephew more below qualifications. The FTSE 100 offers vague possibilities for the company’s position among the fallen. Yet all three of the company’s business sectors reported strong revenue in the first half compared to the same period in 2019 – in terms of improved wound management, revenue doubled.
The features of Smith and Nephew on my list of shares are not the only reason for the increase in revenue to buy for my portfolio right now.
I generally like the medical device space. Healthcare costs are resilient, and healthcare providers are willing to pay for well-known brands. It helps a company like Smith & Neptune with a reputation for quality. The company has maintained its guidance for this year and has continued its trade profit target of 18% -19%.
However, Smith and nephew share prices continue to be at risk. Further lockdowns in some markets that delay elective surgery could again hurt both revenue and profits.
FTSE 100 Fowler: Reckitt
Another blue chip company among the FTSE fallers in the past year Racket (LSE: RKT). Consumer product groups own such brands Dettol And Finish. But its own endings have weakened in the last 12 months, with Reckitt’s share price falling even more than Smith and Nephew. Shares of Reckitt have fallen 25% during this period.
Like Smith and his niece, it’s not without reason – the two main reasons, in fact.
The first is inflation. The company warns that profit margins are threatened if galloping input costs rise if it fails to deliver them to its consumers. Second, the company’s troubled child formula division continues to have problems with share prices. It sold its Chinese baby formula department last month, holding a small portion of the new business. But the challenge of the business unit and its acquisition depends on the price of the racket share added to the racket balance sheet.
Reckitt: Buy shares now?
Against that background, I would consider a racket among stocks to buy now for my portfolio.
The company’s collection of premium brands means it has pricing capabilities. This will help address the challenge of inflation. Sales of the Chinese formula business show that the company is directly tackling its problems. Meanwhile, the shares produced 3.2% and offered exposure to a global business that owns an attractive brand.
There are risks: Debt dividends continue to limit growth, and any economic downturn could lead to a drop in revenue. But Reckitt and Smith and two nephews are FTSE 100s I will consider adding to my portfolio today.
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Christopher Rouen has no position on any of the shares mentioned. Motley Full UK has recommended Reckitt PLC and Smith & Nefu. The opinions expressed in the companies mentioned in this article may differ from those of the authors and therefore the official recommendations we make on our subscription services such as Share Advisors, Hidden Winners and Pro. Here at The Motley Flower we believe that considering a variety of insights makes us a better investor.