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Some well-known FTSE 100 shares have sold off recently for various reasons. Yet I think this has simply opened up dip-buying opportunities for patient investors willing to look past near-term weakness.
Here are two top-notch Footsie stocks to consider buying on the dip.
Down 26%
It had to happen at some point, didn’t it? After an amazing three-and-a-bit years, star performer Rolls-Royce (LSE:RR) has finally caved in to sustained selling pressure.
The stock fell 7.6% to 1,164p on Friday (23 October), bringing the decline since August to 26%. Last week’s sell-off came after French peer Safran warned of softening trends in a key part of the jet engine industry.
We are operating in a complex market environment with air traffic growth softening, particularly in the widebody segment.
Safran CEO Olivier Andriès.
The culprits are the Middle East conflict and soaring fuel prices. As airlines cut long-haul flights, this threatens to show up in Rolls-Royce’s numbers at some point. Clearly, some investors aren’t waiting about to find out.
For me though, this challenge doesn’t undermine the long-term bull thesis for the FTSE 100 stock. At some point, oil prices will come back down and things will settle.
Looking further out, Airbus anticipates global demand for 42,060 new aircraft over the next 20 years. This will be made up of 33,920 single-aisle and 8,140 widebody planes.
Rolls-Royce intends to re-enter the higher-growth single-aisle market. And the Financial Times reported on Friday that the government is close to rubberstamping subsidies of up to £200m to help fund the development of a new short-haul engine (based on Rolls-Royce’s UltraFan technology).
Meanwhile, the AI revolution is still in full swing, creating growth opportunities for the Power Systems division. Rolls-Royce is in discussions with US tech giants about powering more data centres, including eventually using its small modular reactors (SMRs).
After the pullback, the stock looks more sensibly valued at 22.8 times next year’s forecast earnings.
Down 27%
Games Workshop (LSE:GAW) has also declined sharply after years of impressive gains. Since June, shares of the Warhammer owner have dropped 27%.
Naturally, rising inflation and energy costs aren’t helping business here too. Games Workshop could be hit with plastic supply issues and higher manufacturing costs.
Meanwhile, inflation-weary Warhammer fans could forego Christmas 2026 Battleforce boxes (on sale at £165 each). The company also expects to pay roughly £13m of new US tariffs in 2026/27.
Last we heard though, trading was still going well. And core revenue for the year to 30 May rose by 12.2% at constant currency to £634m, while core operating profit jumped 15.7% to £245m.
Games Workshop is continuing to grow the Warhammer hobby through global events, gaming demonstrations and championships, and a growing network of more than 2,000 clubs and independent organisers worldwide. Last year, 79% of core sales came from outside the UK, with third-party trade sales in Asia up 38.3%.
Whatever happens with US tariffs and the oil price, I’m optimistic that growing numbers of people worldwide will continue collecting, building, painting and playing in the worlds of Warhammer. I’d even argue the hobby provides necessary escapism and a sense of community in a troubled world.
After the dip, the stock’s trading more reasonably, at 24 times next year’s forecast earnings. There’s a 3% dividend yield too.
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Ben McPoland owns shares of Games Workshop and Rolls-Royce.
This story originally appeared on Motley Fool
