These FTSE 100 stocks are big fallers. I think they’re too cheap

As I write, the FTSE 100 is actually 3% higher than it was 12 months ago. But I suspect that you will agree with me when I say that it feels like the market has been falling this year.

The reason for this is that the FTSE 100 has been propped up by gains from a handful of its largest members, such as Shell and BP. Elsewhere, most stocks have been falling. In this piece I want to look at three big losers that I’m thinking about buying for my portfolio.

The right medicine

Generic medicine specialist Hikma Pharmaceuticals (LSE: HIK) has fallen by 35% over the last year. The company recently also lost its chief executive, Siggi Olafsson, who quit shortly after Hikma issued a profit warning due to a delay in the launch of a new product.

It’s disappointing, but these things happen. Looking beyond this, I don’t see too much wrong with Hikma’s business. The company’s earnings per share are still expected to rise by 8% this year and its operating margin should stay above 20%.

The main concern I have is that Hikma’s performance could disappoint again later this year. That might be one reason for Olafsson’s departure.

However, with Hikma shares now trading on less than 10 times forecast earnings, I think the valuation probably offers a margin of safety. Hikma is on my list of stocks to buy this summer.

This FTSE 100 stock is getting dropped

My next choice is television group ITV (LSE: ITV). This unpopular stock has fallen by 45% over the last 12 months and is going to be demoted to the FTSE 250 later in June.

ITV shares have slumped due to the company’s decision to increase spending on its streaming services. A new ITVX service is due to replace ITV Hub later this year.

To me, this seems like a no-brainer. Television is moving online, and the UK’s biggest commercial broadcaster needs to move with the times.

ITV has increased spending on IT and programme content to support these changes. That will cause a slump in profits this year. CEO Carolyn McCall expects this spending to deliver future growth. But we can’t be sure of this.

However, with ITV shares now trading on five times earnings and offering a well-supported 7% dividend yield, I’m still thinking about adding to my existing holding.

A special situation

My final FTSE 100 share could soon disappear. Cybersecurity group Avast (LSE: AVST) agreed a merger with US rival Norton LifeLock in October last year.

Avast’s share price hit 650p when the final deal was announced. But the shares have slumped to under 500p since March, due to an ongoing competition investigation that could halt the deal.

This fall means that Avast shares are now at the same level they were at before merger rumours began last summer. The current price looks reasonable to me and I like this business, so I’m thinking about buying the shares.

My only concern is that there might be a third option I haven’t thought of that results in a worse deal for shareholders. I can’t see what this might be, but it’s impossible to rule out at this time.