- Summary:
- The FTSE 100 Index has had a good run this year, but in this large group, there are a few that stand out. We present a case for 3 of these.
Table of Contents
The FTSE 100 Index has been on an upward trajectory for the last week, gaining 1.1 percent during that period. The momentum is partly attributed to expectations that the Federal Reserve could cut interest rates by as much as 50 basis points on Wednesday. Below, we look at the best FTSE 100 stocks and their prospects for continued upside.
Anglo American
The mining giant was the subject of a £39 billion takeover bid by BHP in April, and with it an admission that it had previously underestimated the company’s value. However, Anglo American (LON: AAL) rejected the offer, signalling that it believed it was worth more. As of this writing, the company’s market capitalisation stands at £28.4 billion, which is substantially above BHP’s bid price.
During the bid period, BHP pointed at Anglo American’s strong margins, a healthy balance sheet and long-term growth prospects. These factors remain valid to date, and it wouldn’t come as a surprise if another bid came calling. Furthermore, the copper market is expected to grow significantly in the medium and long-term.
Meanwhile, advancements in the AI technology sector is expected to drive up demand for copper. Data centres currently account for less than 1 percent of the global demand for copper, but that figure is projected to rise to between 5-6 percent by 2050. In addition, the demand from the e-mobility sector (electric vehicles and motorcycles) is expected to rise significantly.
Despite its net loss rising to $1.6 billion in the quarter ending June 2024, the company’s underlying EBITDA rose by $5 billion, pointing to strong fundamentals. In addition, it expects to reduce capital spend by $1.6 billion in the 2024-2026 period. It announced another cost-cutting measure this month, that will see it offload 5% stake in its platinum subsidiary, Amplants. The sale is expected to generate about $400 million and Anglo American aims to fully demarge from Amplants.
Anglo American share price forecast
The Money Flow Index reading is at 64, and calls for further upside on the Anglo American share price on the 4-hour chart. If the action stays above GBX 2,090, the momentum could advance it to test GBX 2,160.5 and potentially to GBX 2,232.0 in extension. Below GBX 2,090, the downside will likely initially settle at 2,037, but extended support could breach that mark, invalidating the upside narrative and potentially testing GBX 1,990.
Anglo American 4-hour chart. Source: TradingView.com
Kingfisher
Home Improvement retailer, Kingfisher (LSE: KGF), saw its share price spike by more than 8 percent on Tuesday, after posting impressive earnings results for the second successive quarter. The B&Q owner’s pre-tax profits grew by 2.3 percent to £324 million. In addition, it revised upwards its guidance for the full year from £490 million-£550 million to £510 million-£550 million.
The company expects a free cash flow of £410-£460 million, up from the previous guidance of £350-£410 million. Furthermore, The positive outlook creates a strong basis for the Kingfisher share price to build on the current 30.3 percent year-to-date gains. In addition, it expects £120 million in cost savings for the full financial year.
Near-term Kingfisher share price analysis
Kingfisher share price spiked today as seen on the chart below. The current momentum calls for further advancements above GBX 311.1. That will likely encounter resistance at GBX 322.7, but extended control by the buyers could clear that barrier to test GBX 322.
Otherwise, a slip below 311.1 will favour the sellers to take control, and initial support will likely come at the psychological GBX 300.1 mark. However, extended bearishness could strengthen the downward momentum to break below that mark, invalidate the upside narrative and test GBX 293.1.
Kingfisher share price on a daily chart. Source: TradingView.com
Barclays
Barclays share price has risen by 45.9 percent year-to-date and is up by 5.1 percent on the monthly chart. The bank’s earnings beat forecasts in the last two quarters, propelled by high interest rates. Its Price-to-Book (P/B) ratio is at 0.57 signals that the stock is currently undervalued. Furthermore, with its share price at GBX 224 Barclays’ Price to Earnings (P/E) ratio is at 8.499. In comparison, its peer, LLoyds has a P/E ratio of 23.1.
Notably, Barclays (LON: BARC) has found support at the GBX 200 mark for the better part of the last five months. Therefore, this could serve as the pivot mark in the coming weeks, with swings either side of it signifying bullishness or bearishness.
Barclays share price on a daily chart and P/E ratio.Source: TradingView.com
However, high interest rates helped UK banks increase their margins. Therefore, another cut in addition to the first one announced by the Bank of England (BoE) in August could add to the downward pressure on margins. That said, lower interest rates could potentially help grow the bank’s loan book through economies of scale.