Could these FTSE 100 bargain shares bounce back in December?
The FTSE 100 has slipped around 1% over the last month. This is a disappointing result, given that November is historically a strong month for stock markets.
On the plus side, the FTSE’s mild drop means the index remains packed with excellent bargains today. The low prices of many quality stocks may in fact spur a possible buying spree in December, also a traditionally robust month for equities.
Take the following UK blue-chip shares: Babcock International (LSE:BAB), Associated British Foods (LSE:ABF), and Scottish Mortgage Investment Trust (LSE:SMT). Each has seen its share price slump over the last month.
Could they be about to explode into life?
Strong riser
Babcock International is one of the best-performing FTSE 100 stocks so far in 2025. It’s up 125%, even after a high-single-digit share price drop since late October.
Yet despite these gains, the defence giant still offers excellent value compared to other industry heavyweights. Its forward price-to-earnings (P/E) ratio is 20.9 times, far below the broader European defence industry’s 29.
Babcock’s shares have dropped on speculation of a poential peace deal between Ukraine and Russia. It’s a scenario that could have a large impact on weapons demand.
However, I’m confident in the defence market picture irrespective of any ceasefire in Eastern Europe. NATO countries are likely to continue re-arming, as fears over a changing geopolitical order and falling US military support grow. I think Babcock will resume its bull run as investors reassess this outlook.
Historically cheap
Dangers remain for Associated British Foods, as weak consumer spending hits sales at its Primark unit. The FTSE firm is also suffering from weak sugar prices and restructuring costs across its other operations.
The conglomerate’s shares have slumped 8% in the last month. Could this be an attractive entry point for long-term investors? I think it might be — which might, in turn, prompt a price recovery.
Associated British Foods shares now trade on a forward P/E ratio of 11.5 times. That’s way below the 10-year average of 17.
This isn’t a stock for the faint hearted. But there’s solid reasons to expect trading to rebound over time, led by global expansion at Primark. Its aggressive growth strategy could leave it in great shape to capitalise on the value retail market, which has scope for further significant growth, according to analysts.
Top tech trust
Scottish Mortgage Investment Trust has dropped 8% in value over the last month. Investors have sold up or reduced their positions due to its exposure to AI stocks like Nvidia and Amazon.
Given fears over a potential AI bubble, this isn’t at all surprising. Further price weakness may be expected if the market stays spooked.
Having said that, Scottish Mortgage’s share price drop suggests a buying opportunity to me. November’s decline means the trust trades at a tasty 10% discount to its net asset value (NAV) per share.
I’m confident the long-term outlook for Scottish Mortgage remains robust. It has significant exposure to hot growth segments like robotics, e-commerce, cybersecurity, and quantum computing, alongside AI. I think the FTSE 100 trust could rebound in December if market sentiment improves, boosted by a likely US Federal Reserve interest rate cut.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Amazon and Nvidia. 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.
