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This ‘dying’ FTSE 100 share is up 53% in 6 months. I like the stock! – The Motley Fool UK

It’s been a good 2021 for the FTSE 100 index. As I write, the Footsie hovers around 7,108.34 points, gaining more than 640 points in 2021. The index has risen almost a tenth (9.9%) since the end of 2020. However, returns have varied widely over the past six months among the index’s members.

FTSE 100: winners and losers over six months

Of 101 FTSE 100 shares (one stock is dual-listed), 82 are up over the past six months. This shows the breadth of the market recovery since winter’s lows. Among these 82 winners, gains range from 78.1% to a tiny 0.1% (just the sort of widely dispersed results I’d expect to see). The average uplift among these gainers is 15.8% — almost six percentage points higher than the index return. This leaves us with 19 FTSE 100 losers, with losses ranging from 1.8% to an unpleasant 29.3%. The average loss among these decliners was 6.9% — almost 17 percentage points behind the Footsie’s near-10% gain.

The Footsie’s five stars

Here are the FTSE 100’s five best performers over the six months since 29 December 2020:

Royal Mail (Postal service) +78.1%
Entain (Betting and gambling) +59.4%
Ashtead Group (Equipment hire) +57.0%
BT Group (Telecoms) +53.0%
Kingfisher (Retailer) +37.0%

Gains among these champion shares range from 78.1% at the Royal Mail to 37% at DIY retailer Kingfisher. Among these five FTSE 100 winners, one share in particular stands out for me. That company is BT Group (LSE: BT.A), whose shares I’ve watched closely in 2021.

BT booms in 2021

I’ve written about BT often since February, when I decided that this FTSE 100 share was undervalued. On 9 February, the BT share price dropped to its 2021 intra-day low of 120.45p, before closing at 122.15p (its 2021 closing low). As I write, the shares trade at 200.6p. That’s a gain of over 80p from the 2021 low point, for an uplift of almost exactly two-thirds (66.5%).

More recently, I have continued to argue that BT shares are underrated. On 13 May, I said that “I would buy BT shares at their current levels” with the share price at 160p. Since then, this FTSE 100 stock has leapt by more than a quarter (25.4%). That’s a great gain in one-and-half months. Also, here’s BT price performance over timescales ranging from one month to five years:

1M +15.9%
3M +40.5%
6M +53.0%
1Y +73.6%
2Y +3.9%
3Y -5.8%
5Y -53.6%

In the short-term, BT shares have been a cherry, rising strongly over four periods up to one year. But they’ve also been a long-term lemon, down nearly 6% over three years and collapsing by more than half (53.6%) over five years. Furthermore, this FTSE 100 stock is £3 lower today than the £5 heights hit in November 2015.

What do I like about BT today? First, the company has restored its cash dividend. The initial yearly payment of 7.7p a share works out at a dividend yield of 3.8%, slightly higher than the FTSE 100’s yield. Second, BT’s contributions to its huge pension deficit are set to fall by £300m a year from mid-2024. Third, Ofcom’s Wholesale Fixed Telecoms Market Review was regarded as being favourable to BT. What don’t I like? Well, BT had a pretty gruesome record of corporate governance and performance in recent years, including an accounting fraud in Italy. Also, it has to spend many billions upgrading the UK’s broadband network. Although I don’t own this FTSE 100 stock today, I would be happy to buy and hold at the current BT share price.

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Cliffdarcy does not own shares in BT Group. The Motley Fool UK has no position in any of the shares mentioned. 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.


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