Thank goodness I avoided these 2 FTSE 100 stocks a year ago. Should I consider them today?
After a roller coaster 2025, plenty of FTSE 100 shares have been left nursing painful losses — but thatâs often where the most compelling opportunities emerge.
Some high-quality blue-chip businesses have seen their share prices knocked down far more sharply than their underlying fundamentals. For investors with a long-term outlook, this could provide a chance to grab some undervalued shares before they rebound.
Experian
Despite strong fundamentals, Experian‘s (LSE: EXPN) share price has plunged about 40% over the past year. According to reports, the market fears that artificial intelligence (AI) might disrupt the company’s business model.
The question now is: will it find new ways to remain relevant in an increasingly AI-dominated world?
On paper, things still look good. Most notably, it boasts a stellar return on equity (ROE) of 27.6%, reflecting efficient profit generation from shareholder capital — well above industry averages.
The balance sheet and recent results are also impressive. Equity comfortably covers debt, revenue grew 5.8% year on year, and organic growth reached 8% in recent results. A majority of analysts give the stock a Strong Buy rating. Targets like 4,300p from UBS highlight optimism about its cloud migration and margin expansion.
Earnings per share (EPS) rose 15% even as the share price fell, reiterating the external impact of AI and potentially setting up a rebound if fears subside.
One key risk is sensitivity to interest rate shifts and lender caution. This could slow credit checks and fraud screenings (one of its main revenue drivers) if borrowing stays subdued longer than expected.
Considering Experian’s market-leading position, it seems unlikely that these temporary challenges are insurmountable. For patient investors, I think this price slump presents an opportunity worth exploring — and one I plan to capitalise on.
Sage Group
Shares in Sage (LSE:SGE) are down 39% in the past year, hitting new lows around 800p after analyst tweaks. But like Experian, its fundamentals remain solid. An exceptional ROE of 40% suggests excellent capital efficiency, with its net margin at a decent 14.68%.
Revenue climbed 7.76% year on year (averaging 6.9% historically), fueled by recurring SaaS subscriptions and cloud transitions in accounting software. Most analysts view it as a Strong Buy, with a board-approved buyback signaling potential undervaluation. It has a moderately low forward price-to-earnings (P/E) ratio of 15.9 and an acceptable P/E growth (PEG) ratio of 1.22.
Plus, EPS forecasts of 42p support dividend sustainability.
However, an increase in insider sales have raised eyebrows. Total insider ownership remains below 1%, so the impact is minimal, but the sentiment is concerning. But a more pressing risk is elevated debt — more than double equity. That could strain finances or lead to a default if earnings slip amid economic slowdowns or delayed cloud adoption.
To some degree, the company’s solid cash flow and strong ROE mitigate this risk. Plus, the share price decline appears overstated due to sector rotation away from growth tech.
For risk-tolerant buyers eyeing long-term compounding, this could be an opportunity to grab some shares in a growing firm with loyal enterprise customers. The tech rally might be cooling off in the short-term, but Sage remains a compelling stock worth considering.
The post Thank goodness I avoided these 2 FTSE 100 stocks a year ago. Should I consider them today? appeared first on The Motley Fool UK.
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Mark Hartley has no position in any of the shares mentioned. The Motley Fool UK has recommended Experian Plc and Sage Group Plc. 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.
