Although the FTSE 100 has fallen of late, I’m still bullish about its prospects and that’s why I’m focusing on Centrica PLC (LON:CNA) (CNA.L), J Sainsbury plc (LON:SBRY) (SBRY.L), Rio Tinto plc (LON:RIO) (RIO.L) and Reckitt Benckiser Group Plc (LON:RB) (RB.L).
Centrica’s outlook may be uncertain at the moment, but I believe its new strategy could lead to improved performance in the long run. Its cost reductions could create a leaner and more nimble entity which is better able to generate a more resilient earnings performance.
With a dividend yield of 8%, Centrica continues to have income investing appeal in my eyes. The company may experience volatility in the near term, but after a 40%+ share price fall in the last year I feel it has value appeal.
Sainsbury’s deal to buy Argos could be a key catalyst for its future performance. The synergies and cross-selling opportunities on offer could help it to offset potential declines in sales which may occur due to continued high competition in the supermarket sector.
With Sainsbury’s forecast to increase EPS in the next couple of years, the stock could be a surprisingly strong performer.
Rio Tinto has benefitted from a resurgence in the iron ore industry. The price of the steel-making ingredient has risen in the last year as China has shifted its investment policy. While this situation may or may not continue, the company’s financial performance could be relatively sound.
Rio Tinto’s cost base has fallen significantly in recent years. This could put it in a stronger competitive position and while it still lacks diversity versus some sector peers, I feel it has profit growth potential.
Reckitt Benckiser is in the middle of making major changes to its business model. It is in the process of restructuring and this could create a stronger business over the medium term. Its acquisition of Mead Johnson may also open up new growth avenues for the company over the long run.
With demand for its products likely to remain high, I see Reckitt Benckiser as a relatively defensive stock. Therefore, I feel it could perform well during an uncertain time for the Footsie.