I’m looking to add cheap blue chips to my stocks and shares ISA and three immediately catch my eye. All have had a rough June, with their shares falling by 8-15 per cent. This looks like a buying opportunity to me.

Luxury goods brand Burberry Group (LSE: BRBY) was the second worst performer in the entire FTSE100 in June and fell by 15.11%. Only B&M European Value Retail Burberry fared even worse, losing 18.83 percent. Burberry also had a bad year. Over the last 12 months, the share price fell by a whopping 58.94 percent.

Current economic uncertainty, particularly in China, has led to a sharp decline in post-tax profit, which fell from £492 million in 2022 to £271 million in 2023.

Cheap blue chips

Fashion is cyclical by nature and Burberry has fallen out of fashion recently while its marketing efforts have repeatedly backfired. The luxury market is considered recession-proof because the super-rich can afford to keep spending, but Burberry hasn’t quite reached the ultra-high end of the market yet.

I bought the shares twice in May hoping to capitalize on the company’s difficulties, but I got in too early. I lost a brutal 23.33%. I hope to limit this loss by averaging down my Burberry shares in July. At 12.25x earnings – half of their previous value – and a healthy yield of 6.16%, they look like a good buy to me. I think Burberry should recover, but that will take some time.

I am also thinking about increasing my stake in a struggling pharmaceutical company GSK (LSE:GSK). I bought the stock in March because I thought it was ripe for a rebound after years of underperforming against a steep competitor. AstraZeneca.

I then set an average down in June when shares fell 10%, fearing litigation over Zantac treatment. Now I am wondering if I should take a third bite, as the stock fell another 4.06% last week alone. This time, the blame was on a decision by the US health authority, which opened the market for its Arexvy Product. Overall, the stock has fallen by 9.06% in the last year.

I think the market has overreacted. The shares look enticing with a price-to-earnings ratio of just 9.84 and a solid yield of 3.79%. GSK should make it in the end. I see bumps in the road as buying opportunities and don’t plan to waste them.

Another LSE opportunity

I have longed to buy private equity specialists Medium-sized capital group (LSE: ICG) for two years now, so what was holding me back? The rapidly rising share price. I felt like I had missed the momentum.

Today, that’s less of a concern, with the share price down 8.86% in the last month. However, over 12 months, it’s still up 59.33%. That shows how well the company is doing: Group profit rose 132% to £258.1 million in 2023. Performance fee income rose 276% to £73.7 million.

The story continues

I expected this to make the stock super expensive, but instead it’s trading at a modest 13.48 times earnings, which eases any fear that I’m overpaying.

Private equity can be risky. If interest rates stay high for a long time, Intermediate Capital Group could struggle to repeat last year’s share price rise. This is a volatile sector, but the recent drop in share prices could be my opportunity. I want to buy all three stocks at discounted prices. It’s time for a summer shopping spree.

The post 3 FTSE 100 bargains I’d love to add to my stocks and shares ISA in July appeared first on The Motley Fool UK.

Further reading

Harvey Jones has positions in Burberry Group Plc and GSK. The Motley Fool UK has recommended AstraZeneca Plc, B&M European Value, Burberry Group Plc and GSK. The views expressed on companies mentioned in this article are those of the author and may therefore 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.

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