The FTSE 100 (FTSEINDICES: ^FTSE) edged slightly lower to 6,800 points in early trade this morning as investors continue to exercise caution before the index goes on to surpass record highs. Mondi is the leading riser, up nearly 4%, after delivering a strong rise in profit this morning.
February has been the best month in over half a year for the UK’s top share index, which is within touching distance of the record set in 1999, but don’t expect the market to bomb on next month. It might take some baby steps first.
These are three shares you should have bought this week:
Carphone Warehouse
Shares in Carphone Warehouse (LSE: CPW) are up 14% on the beginning of the week to 347p. On Monday the firm confirmed that it was in preliminary discussions over a merger with Dixons (LSE: DXNS), albeit the talks are only just starting, and there’s no guarantees.
The merger could potentially result in the formation of a new FTSE 100 retailer worth £3.5bn. Carphone attempted to enter the electricals sphere back in 2008 when it began a joint venture with Best Buy to bring the US electronics chain to UK shores. The timing wasn’t exactly great for that — the financial crisis was peaking then — and the Best Buy stores closed down in 2011.
Dixons
For Dixons, the owner of Currys and PC World, a merger would make a lot of sense. It already has a very small stake in the smartphone market, with 150 Phones 4U concessions in-store, but Dixons evidently wants a bigger piece of the action.
A relationship with Carphone, the market leader in smartphones, could be quite lucrative. The two retailers combined would have more than 1,200 stores in the UK, and savings will be made through store closures. In addition, combined revenues of some £12bn should see a significant increase in buying power.
Shares have increased 9% to 51p since Monday.
Ocado
Ocado (LSE: OCDO) is a share that seems to bemuse and delight people in about equal measure. Just on the beginning of the year its share price has increased 30%, and on this time last year it’s up 340%.
Many will scoff at that. But while some wonder how a loss-making firm is worth £3bn, a greater number of investors believe it has the potential to become a dominant force in online shopping.
As of yesterday, shares in Ocado are up nearly 8% on the week before. With a share price of 570p, Ocado shares trade at 148 times earnings, while the firm has vowed to this year deliver a maiden profit.
