Picture supply: Vodafone Group plc
Initially of this 12 months, the tea leaves weren’t essentially optimistic for the FTSE 100 index of main British firms.
The financial system was fragile, with restricted development prospects. Geopolitical dangers weighed on the financial outlook.
Quick-forward to now. The FTSE 100 is up by 18% because the begin of the 12 months. Alongside the way in which it has repeatedly set new all-time highs.
Can the nice instances hold rolling?
Glass half full – or half empty?
Funnily sufficient, the reply to that query is just like what it might have been 12 months in the past.
Globally, dangers together with geopolitical uncertainty stay. In the meantime, the UK financial system continues to look sluggish.
Nonetheless, that has not stopped the FTSE 100 powering forward over the previous 12 months.
Even after its rise, the index nonetheless sells on a decrease price-to-earnings ratio than main US inventory indexes.
So, it could possibly be that the FTSE 100 retains doing properly. Then once more, given the broader financial context, it could be that the FTSE 100 begins to fall.
Right here’s my strategy
Both state of affairs may make sense to me. However, like everybody else, I have no idea for sure what is going to occur subsequent.
That’s positive, as I’m not investing within the index (for instance, by shopping for shares in an index tracker).
As an alternative, I’m on the lookout for what I see as attractively valued particular person shares inside the FTSE 100.
One share to think about
One FTSE 100 share I believe buyers ought to think about for the time being is telecoms big Vodafone (LSE: VOD).
Whereas the index’s 18% acquire up to now this 12 months is spectacular, Vodafone has executed twice as properly with its 37% share value rise because the flip of the 12 months.
The corporate is well-known, due to its sturdy model and large buyer base throughout many European and African nations.
However one factor not all buyers have totally appreciated is the expansion alternative Vodafone has in Africa. That’s true of voice and information providers, however I believe one other fascinating space is cellular cash.
Each Vodafone and Airtel Africa have been going gangbusters of their cellular cash operations. Vodafone describes its personal M-PESA providing as “the world’s most profitable cash switch service”.
Firms like Smart could have their very own view on that, however what shouldn’t be unsure is that Vodafone has a big cellular cash operation with important potential for future development.
Final month Vodafone introduced its first dividend improve in seven years. The share at present yields 4.3% and nonetheless sells for pennies regardless of its sturdy efficiency up to now this 12 months.
One danger I see is rivals scaling up their cellular cash operations, maybe taking market share from Vodafone and hurting its profitability.
However with its massive buyer base, geographic diversification, and robust model, I see so much to love in regards to the FTSE 100 firm.
