These 3 FTSE 100 shares have bombed, but I’d buy one now

One of my favourite hobbies as an investor is trawling through the FTSE 100, looking for ‘fallen angels’.

Fallen angels are shares in otherwise solid companies that have been beaten down. Once I’ve identified suitable stocks, my goal is to buy and hold these undervalued shares for the long term.

FTSE 100 winners and losers

Earlier, I screened the Footsie for value shares and, over the past three months, the following numbers jumped out at me.

Over three months, the FTSE 100 has lost 4.6% of its value. In that time, 34 stocks have gained in value, while 66 have declined.

Among the 34 winners, three-month returns range from 24.1% to 0.5%, with an average gain of 7.8%. Among the 66 losers, returns range from -0.1% to 33.1%, averaging -10.6%.

The Footsie’s biggest losers

These are the index’s biggest laggards since 3 March, plus price changes over one and five years:

My table shows that three-month declines among these FTSE 100 dogs range from almost a quarter to nearly a third. Also, all three stocks have been dogs over 12 months, losing between two-fifths and almost two-thirds of their value.

Over five years, the picture looks even worse, with two of the stocks crashing more than 60%. Frankly, anyone owning these three stocks since, say, 2021, is going to be disappointed.

I’d back one of these businesses today

By the way, my wife and I bought shares in Vodafone Group at 90.2p each in December 2022. To date, we are sitting on a paper loss of around a sixth (-16.3%). While we have no intention of selling our Vodafone stock anytime soon, lack of cash prevents us from buying even more.

Meanwhile, I can’t wait to receive a tax-free cash windfall in July, which we will use to buy more shares. And the ‘dog’ stock I’d buy from my table above is mega-miner Anglo American (LSE: AAL).

Anglo American looks cheap to me

I’d have loved to have bought this FTSE 100 miner earlier this week, when its shares collapsed to a 52-week low of 2,223.5p on Wednesday (31 May).

As I write, the shares are up 5.1% today to trade at 2,417p, valuing the group at £32.3bn. But that’s a long way short of the 52-week high of 4,036p, hit almost a year ago on 7 June 2022.

At current levels, this stock trades on a trailing (that is, historic) price-to-earnings ratio of 8.2, which translates into a market-beating earnings yield of 12.3%.

Meanwhile, the bumper dividend yield of 6.8% a year is far above the FTSE 100’s yearly cash yield of around 3.7%. Also, this dividend is covered 1.8 times by earnings, which offers some margin of safety.

Now for the bad news. Metals prices have fallen this year, which will drag down Anglo American’s 2023 earnings. Also, the group has a history of cutting its dividend during hard times, most recently in 2015, 2016, 2020, and 2022.

Even so, I’d happily buy this cheap stock today for future dividends and capital gains — if I had any spare cash, that is!