The FTSE 100 index is the most influential stock index of the London Stock Exchange comprising of the largest companies listed on the Exchange in terms of revenue and market capitalisation. During the year 2019 this index performed better than its other FTSE Russell company-maintained cousins mostly on account of several of its constituent companies beating the politico-economic blues of the British economy. This was made possible by the increased proportions of earnings coming from overseas markets during the past couple of years. The year also saw several of the companies on the index paying out record dividends which have not been seen in recent years.
Below is the list of five interesting companies that have decent prospects for 2020 and beyond.
- Evraz Plc – Evraz Plc (LON: EVR) is a Russian Steel production giant. It has interests in steel, vanadium and mining & minerals, with business operations in the countries of the Russian Federation, the United States, Kazakhstan Canada, the Czech Republic, Ukraine, Italy, and South Africa. The company’s principal activities include iron ore mining, iron ore beneficiation and steel smelting apart from producing vanadium-based products and also trading and logistics activities relating to these products. The company also has holds interests in energy producing companies, shipping and railway transport companies.
The company is one of the largest players in the metal mining and production space in the world with efficiency dynamics at par with the best among its contemporaries. In the recent past steel and other related commodities dealt by the company have suffered on the pricing front on account of the Chinese slowdown. In the improved economic landscape of 2020, the fortunes of this company would significantly improve with the improvement in commodity prices.
- Anglo American Plc – Anglo American Plc (LON: AAL) is a London, United Kingdom-headquartered international mining group, with operations in North and South America, Southern Africa, and Australia. Its principal operations include mining, exploring and processing of metal and minerals globally, with a portfolio including metals such as copper, platinum, diamonds, iron, nickel, manganese and thermal coal. The group was established by entrepreneur Ernest Oppenheimer in 1917 in Johannesburg, South Africa, but the group has expanded in many industries and expanded beyond its roots in South Africa. The group owns one of the largest and most attractive undeveloped copper deposits in the world, along with other world-class portfolios of mining and processing operations of other assets and undeveloped resources.
Anglo American Plc also deals with multi mineral and metal resource production and trading business. The company’s performance at the London Stock Exchange has been sinusoidal in the year 2019. The company’s performance is also highly dependent on international commodity prices and could see a significant upheaval in 2020 with the improvement in commodity prices.
- Micro Focus International Plc– Micro Focus International Plc (LON: MCRO) United Kingdom domiciled leading infrastructure software company which specialises in management of mature infrastructure software assets assisting organisations bridge the gap between the old with the new. Headquartered in Berkshire, the company serves approximately 40,000 clients and is the largest technology company listed on the London Stock Exchange and is the seventh-largest software company in the world. As part of its service deliverables, the company assists businesses preserve & protect their data, business logic and gain incremental & sustained returns on investments.
Last year the company had acquired the enterprise software business of Hewlett Packard of United States but was having problems integrating it with its own platform and has been working since to resolve the outstanding glitches, the acquired business is a highly successful platform with large existing client base and will put the company on a high growth trajectory once the integration issues are resolved.
- Ocado Group Plc – Ocado Group Plc (LSE: OCDO) is a United Kingdom domiciled, one of the largest online grocery retailers of the country. The company does not own any chain of stores as all deliveries are done from its warehouses, building on the unique business model the company has developed. This positions it strongly as consumers increasingly move towards online shopping. Its business is based on proprietary technology and intellectual patent. These serve to operationalize the unique end-to-end solutions for online grocery retail operations and positions the group well to take advantage of these long-term structural trends, driven by different shopping habits and ever more advanced technologies for the consumer.
The company has entered into some significant deals in the year 2019. The first being the deal with M&S in the United Kingdom which had seen its revenues increase significantly during the year. Other than that, it has entered into significant technology deals in the United States and Japan where Ocado Smart Platform ("OSP"), the company’s IT platform, has found prospective retail companies in each of these geographies who want to utilise it to improve and expand their business performance. As these deals go online in 2020, the revenue to the company from this non-core resource will significantly contribute towards its bottom-line.
- Barratt Developments Plc – Barratt Development Plc (LON: BDEV) is a United Kingdom domiciled property developer. The company is one of the largest home building companies in that country having an operating network of 30 divisions, with the company also owning and operating three consumer brands; Barratt Homes, David Wilson Homes and Barratt London. The company is one of the best performing companies in its class on the London stock exchange, during the previous five years, the group has recorded a Net Margin of 12.54 per cent against the industry average of 11.89 per cent recorded in the same period and delivered a 5-year average return on investment (ROI) of 11.4 per cent against the industry average of 10.45 per cent respectively.
The Real estate market in the United Kingdom has been one of the hardest hits due to the Brexit headwinds. In the Improved politico-economic conditions in the United Kingdom in 2020, the real estate market will get a big boom due to the pent-up demand of previous years.
The above are only five instances of a number of promising candidates for the year 2020 belonging to the FTSE 100 index. There are also many other stocks on the FTSE 250 index and FTSE AIM All Share index with potential for superior value creation for shareholders.
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