While the FTSE 100 (INDEXFTSE:UKX) has risen by over 6% in the last month, I’m considering whether shares in Next plc (LON:NXT) (NXT.L), Diageo plc (LON:DGE) (DGE.L), Vodafone Group plc (LON:VOD) (VOD.L) and BAE Systems plc (LON:BA) (BA.L) can outperform the index.
Next’s financial performance and share price could gain a boost from falling inflation. Wage growth is now ahead of inflation and this could mean that consumer spending receives a boost over the medium term.
With Next having what seems to be a sound strategy and strong online growth potential in particular, I’m upbeat about its investment potential.
Diageo’s diversity means that it could offer defensive qualities. It has a wide range of brands in a number of key markets, and since customer loyalty seems to be high it could have significant levels of pricing power.
With Diageo expecting to complete its efficiency drive over the next couple of financial years, it could be in a stronger position to deliver EPS growth in future. Alongside its defensive qualities, this could make it a sound investment that could beat the FTSE 100.
Vodafone’s results released yesterday showed that it is making good progress with its strategy in my view. Sure, the departure of its CEO may cause some uncertainty, but its 6% dividend yield suggests that it has a large margin of safety which could mean a higher share price is on the horizon.
With Vodafone expected to post double-digit EPS growth in the next financial year, I feel that it has a good chance of beating the Footsie. It seems to offer growth at a fair price.
BAE Systems may have experienced a difficult period which has caused its share price to have some volatility. But with the prospects for the defence sector seemingly improving due in part to the potential for higher government spending, its financial performance could gain a boost.
BAE may not be the cheapest share in the FTSE 100, but the company appears to have growth potential in the long run. It could also offer a degree of stability should the wider index experience a return to the volatility seen in the earlier part of the year.