With the FTSE 100 having delivered a rollercoaster ride during the course of 2014, it’s not surprising that many investors are finding it a challenge to predict where it’s headed to next.
Indeed, in the last three months alone, the FTSE 100 has been up by as much as 3% and down by as much as 7%. For such a short time period, that’s an extremely large range.
However, whether the FTSE 100 moves up, down or sideways over the medium to long term, there are a number of stocks that could deliver a relatively stable and consistently strong performance for investors. Here are three prime examples that could be a means of beating a volatile FTSE 100.
SSE
With shares in SSE (LSE: SSE) having outperformed the FTSE 100 by 17% during the course of 2014, it seems as though sentiment in the domestic energy supplier is strong. Despite this, shares in SSE still trade on a relatively attractive price to earnings (P/E) ratio of 13.1, which shows that there is scope for a further upward rerating. In addition, with a yield of 5.7%, SSE is likely to continue to attract investors seeking an income, which should support demand for shares in the company over the short to medium term.
In addition, SSE also has a beta of just 0.6. This means that for every 1% move in the FTSE 100’s price level, SSE’s share price should move by just 0.6%. Therefore, holding shares in SSE should prove to be a less volatile experience relative to the wider index and, with its enticing income and value prospects, SSE could continue its outperformance of the FTSE 100.
Centrica
It’s been a different story at Centrica (LSE: CNA), with shares in the domestic energy supplier and exploration company underperforming the FTSE 100 by 17%. A major reason for this is uncertainty surrounding the new management team that is due to start in 2015, as well as a challenging period that is due to see the company’s bottom line fall by 21% in the current year.
Despite this, Centrica could have a bright future. For starters, it is forecast to bounce back next year with growth in earnings of 12% and, with a dividend yield of 6%, sentiment could rise as investors become hungrier for dividends as interest rate rises remain frustratingly slow.
In addition, Centrica has a beta of just 0.56 and, although shares have disappointed this year, they are likely to deliver a less volatile performance in future, relative to the wider index.
BT
Having tracked the index for much of 2014, shares in BT (LSE: BT-A) (NYSE: BT.US) have dropped off the radar of many investors. However, they could beat the FTSE 100 moving forward, and do so with less volatility than the wider index as a result of them having a beta of just 0.83.
Indeed, BT seems to be making strong progress with regard to its transition to pay-tv provider. Although pricing pressures remain in the industry, BT said in its recent results that it will remain disciplined and only focus on profitable revenue growth. As such, its bottom line is expected to rise by 7% next year and, with a P/E ratio of just 12.5, there is scope for an upward rerating to its shares.
