Beating the FTSE 100 is a key goal for me when I decide where to invest through my ISA, which is why I’m focusing on the investment potential of BT Group plc (LON:BT.A) (BT.A.L), GlaxoSmithKline plc (LON:GSK) (GSK.L), J Sainsbury plc (LON:SBRY) (SBRY.L) and Next plc (LON:NXT) (NXT.L).
BT seems to have a challenging period ahead of it. Investor sentiment remains downbeat and this could cause its share price to come under further pressure after a dismal run in the last year.
However, with costs being cut and the company investing heavily in its product offering, I think that BT could deliver a strong turnaround. With a restructuring, it may emerge stronger and its single digit PE could lead to high capital growth in future.
Sainsbury’s also faces an uncertain near term outlook in my opinion. The company is experiencing challenging trading conditions as consumers feel the pinch from higher inflation.
However, with cross-selling opportunities from the merger with Argos, Sainsbury’s may be able to outperform many of its sector peers. Therefore, with a dividend yield of over 4% and positive EPS growth forecasts over the medium term, I’m upbeat about its prospects.
GlaxoSmithKline is another FTSE 100 stock that I think could outperform the wider index. The company has a diverse set of operations which could help it to offer defensive characteristics. If markets remain volatile, then it could become a more popular stock.
Since GlaxoSmithKline has a dividend yield of around 6%, it may also see demand for its shares rise if inflation remains stubbornly high.
Next’s management team is one of its biggest strengths in my view. They have so far been able to guide the company through a difficult couple of years, with its sales performance being stronger than many of its retail sector peers.
With what I consider to be a high level of customer loyalty, I’m optimistic about Next’s future performance. It may be more resilient than the valuation which the stock market is currently pricing in.