1 underperforming UK share to consider buying today, and 5 I’m avoiding for now

I’m always on the lookout for a UK top dividend to add to my ISA or SIPP. Usually, I point FTSE 100 companies that take less. I’m attracted to companies that didn’t like me. The goal is simple: get them cheap, lock in a high yield, and wait patiently for them to recover.

It doesn’t always work though. Sometimes bullish stocks continue to run ahead while stripped stocks continue to be beaten. But overall, it served me well. So where are the opportunities today?

Despite the FTSE 100 moving above 10,000, there are plenty of laggards. Currently, most reside in the data and analytics sector, where investors fear that artificial intelligence may upend traditional business models.

Fear grips the FTSE 100 sector

Accounting software specialist Sage down about 40% over the year. Credit agency Experian decreased by 35%. Pearson, RELX again London Stock Exchange Group they took a big hit too. Until recently, they were market darlings trading at price-to-earnings (P/E) ratios above 30. Now they are considered as if extinction is imminent.

I suspect the market is overreacting. AI is powerful, but flawed. It relies on reliable data sources, many of which are provided by these companies. These companies are also embedding AI into their platforms, which can improve customer service and productivity. However, once fear grips investors, it can be difficult to shake. Every new AI product launch can disrupt the markets as well. I think the threat has passed, but the shadow will take time to lift. They are exactly the kind of stock I would like to buy, but right now I’m panicking again.

I learned some hard lessons about growing sick drinks Diageo (LSE: DGE). Having endured a brutal spell, the shares have nearly faltered over the past three years. The decline that began with weakness in Latin America and the Caribbean turned into a broader one. Sales are down in Western markets and China. US tariff worries and changing drinking habits add to its woes.

Diageo is showing signs of life

I was losing weight and stocks were sliding. Then in January I got bigger, I made more money. Since then, there have been unexpected signs of improvement. The stock price is still down 17% in one year, but has jumped nearly 10% in the past month. Of course, that would be a false dawn. But new chief executive Dave Lewis has a clear mandate to take drastic action. His record in Tesco suggests that he is not afraid of tough calls. Diageo needs them.

There is a lingering concern. Weight loss drugs can prevent alcohol consumption. Gen Z seems to drink less. But social drinking has been a part of human life for centuries. When disposable income returns, I suspect our thirst will return.

Shares trade at a price-to-earnings ratio of 15.3. The next yield rose to 4.35%, although Lewis may cut shareholder payouts as part of his reset. But I think Diageo is starting to see the light at the end of the tunnel, and those data reserves that were strong may have just entered it.