G4S plc set for FTSE 100 promotion. Sirius Minerals plc to enter FTSE 250

It’s all change as G4S plc (LON:GFS) comes back to the FTSE 100 (INDEXFTSE:UKX) and Sirius Minerals plc (LON:SXX) steps up to the FTSE 250 (INDEXFTSE:MCX).

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Intu Properties (LSE: INTU) is odds-on for relegation from the FTSE 100 when the FTSE committee publishes its latest quarterly index review on Wednesday. G4S (LSE: GFS) currently sits in pole position to take its place.

According to my sums, Hikma Pharmaceuticals is also teetering on the brink of demotion, which could pave the way for Segro to join G4S in the top index.

Meanwhile, Sirius Minerals (LSE: SXX) is set to jump straight into the FTSE 250 following its recent move to the Main Market from AIM.

More to come?

It looked at one time as if G4S had established itself as a fixture in the FTSE 100. Having entered the index in 2007, the multinational security group performed relatively well through the market crash of 2008/09 and emerged as a middle-ranked blue-chip.

However, a combination of company problems and a recovery in the wider market saw it sink down the rankings to such an extent that it was demoted to the FTSE 250 in December 2015. Its shares went on to hit a multi-year low of 164p last summer.

Since then, the turnaround of the business has gained traction and the share price has just about doubled. Could there be more to come?

A forward P/E of 17.5 on forecast earnings growth of 17.5%, gives a rating bang-on the ‘fair value’ price-to-earnings growth (PEG) marker of one. However, analysts have been revising their earnings forecasts upwards and there could still be decent gains to be made here if that trend continues.

Contrarian buy?

It would take a miracle in the next couple of trading days for Intu Properties to avoid being ejected from the FTSE 100. It currently sits eight places below the automatic demotion threshold.

The company is largely focused on UK shopping centres. The shares have declined as investors have turned cautious on the prospects for the business in light of the challenging trading environment facing retailers and the considerable uncertainty regarding the UK’s EU exit.

I think investors are right to be cautious. I’m not convinced a P/E of 18 and a vulnerable-looking 5.2% dividend yield are sufficiently attractive to make Intu’s shares a contrarian buy.

Substantial rewards?

Shares of Sirius Minerals were trading at 18.25p on London’s junior AIM market when I last wrote about the company in February. They’re now 10p higher following positive news flow on the development of its massive North Yorkshire polyhalite project and a move to the Main Market. With a capitalisation of near to £1.2bn, Sirius is set to catapult straight into the FTSE 250.

If the company delivers its project on time and on budget, and meets its volume and price targets, I reckon the market cap could be above £15bn in 10 years’ time. To put that into context, Tesco is currently valued at £15.3bn and ranked number 34 in the FTSE 100.

Of course, with five years of construction and 10 years to targeted full production, Sirius is a proposition for risk-tolerant, patient investors with a long-term horizon. However, the rewards could be substantial if things go broadly to plan.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

G A Chester has no position in any shares mentioned. The Motley Fool UK has recommended Hikma Pharmaceuticals. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »