This is January’s most hated FTSE 100 stock. I’d buy it

I see myself as a contrarian investor, one who hunts down some of the most underrated stocks FTSE 100 and buy them before they swing back into favor. That way I took the cheap stock, and benefited when it recovered.

I’m keeping track Rolls-Royce the price shows as it slid relentlessly before finally deciding it hates enough to buy in October. Since then it has rocketed 40%. Can I repeat the trick?

Is this the UK’s worst blue chip?

Fund platform AJ Bell has published a list of the most popular UK stocks and the most popular among analysts. It also reminds us that analysts tend to be wrong, as major options in the last decade have repeatedly failed to beat the index.

Shareholders in asset managers Abrdn (LSE: ABRDN) will be hoping they are wrong this year, as January analysts are shunning the stock more than others. A total of eight analysts issued a ‘sell’ notice on Abrdn, with five recommending ‘hold’, and only one quiet soul called it a ‘buy’.

That could do as 57% to sell, ahead of the most hated FTSE 100 stocks, Move right, at 47%. 2022 will be tough for Abrdn, which has a negative total return of 14.9%, even after taking out the dividend, which currently yields 6.91%.

Abrdn is not the worst player in 2022 on the sale list. Ocado posted a total negative return of 53.2%, while investors in Dechra Pharmaceuticals (50%), Hargreaves Lansdowne (34%), Rolls-Royce (24.2%), and Admiral Group (20.4%) all lost more.

Dangerous but rewarding

As an asset manager, Abrdn’s share price can be expected to rise when the market struggles, as it did last year. However, it has fallen since its ill-fated merger with Standard Life in 2017, with shares roughly halving since then.

Investor confidence slumped again after last summer’s report of a drop in first-half pre-tax profits, down 39% from £163m to £99m. Abrdn management blames market movements.

Unfortunately, last year’s share price has not translated into a low share price, as Abrdn trades at a P/E ratio of 15.2, roughly fair value. There are lower dividend stocks in the FTSE 100 today. The dividend is expected to rise slightly to 7% this year, but again, there is a downside. The cap is expected to drop from the current wafer-thin, to just 0.9. This leaves no question marks about sustainability.

It’s not hard to see why analysts are wary. But Abrdn’s share price is also showing signs of life, rising 12.48% year to date as investor sentiment improves. Management has also rewarded loyal investors with a share buyback programme, acquiring 179 million of its own shares last year for £300m.

Abrdn remains a problem company, and this remains a problem market. However, I am investing in FTSE 100 shares with a minimum view of 15 years and on that time scale I think it will make a good long-term buy and hold. It is now on my wishlist and I would buy it today if I had money to spare, what the analyst said. But then, I’m a contrarian.