Richard Buxton, the head of Schroder UK equities, has followed a similar line of reasoning to many of his peers and stated that he expects the FTSE 100 Index to gain 20 per cent over the course of 2011. This increasingly optimistic view of potential growth next year has led to increased speculation as to which of the 100 listed companies will perform strongly.
Buxton believes that certain markets will perform exceptionally well during 2011. He has already predicted that Burberry, Experian and Autonomy will experience “growth in a sluggish environment”. Buxton also feels that the feel-good factor generated by the 2012 Olympics, and the fact that most of the public spending cuts will have been implemented by 2011, will constitute a line in the sand for those companies that have experienced disappointing trading figures over the past couple of years.
The start of 2011 will, according to Buxton, see equity stakes in Debenhams, Taylor Wimpey, Home Retail Group and Next prove to be sensible long-term investments, especially over the next two to three years. With shares in Debenhams and Taylor Wimpey currently trading at a 15 per cent discount, Buxton believes that they make for sensible investment opportunities in the New Year.
Another sector to watch in 2011 is petroleum. While BP’s shares have taken a huge hit on the back of the Deepwater Horizon oil spill, speculation is mounting that BP could be subject to a takeover, with Exxon and Royal Dutch Shell, which incidentally reported a 9p rise to 1,962p in share prices on October 30th, both linked with a takeover of the ailing company. This is certainly an industry to keep a close eye on for 2011 portfolios.
Communication companies are also worthy of serious consideration. Both Motorola and Vodafone have added considerable value to their share prices over a difficult trading period up to October. Apple will be confident of record sales of its iPhone, iPod and iPad in the run up to Christmas, while Samsung is also recording impressive figures thanks to its new range of smartphones. In addition, several new competitors for the Apple iPad are due for release in 2011, so this could be a market with considerable growth potential.
Retailers such as Tesco continue to perform well, chiefly due to its competitive pricing, especially during a time of low growth and public spending cuts. Other supermarket brands such as Marks & Spencer, Morrisons and Sainsbury’s are all following the lead and becoming far more competitive in their pricing policy, which could spell solid returns for investors throughout 2011 and beyond.
Despite public sector cuts, the fear of unemployment and a turbulent two-year period that has seen the FTSE 100 Index range between 4,800 and 5,800 points during the past 12 months, 2011 promises to be a brighter year for several industries. This is chiefly because investors and corporate bosses start to invest their capital in stocks and shares once again as the state of the economy is revealed, hopefully, to not be quite as bad as once feared.