I think the FTSE 100 could hit its next big milestone of 8,000 points in 2023. Despite the energy crisis ravaging the UK right now, the Footsie seems to be hitting higher levels after every mini crash. Just in September, the UK’s premium index has rallied nearly 5% and I think this is a strong sign that the march to 8,000 is already under way. I’m looking at two FTSE 100 shares for my growth portfolio and I think I’ve found potential winners.
A rare tech gem in the FTSE 100
One company that has caught my eye recently is Sage Group (LSE:SGE). The software firm is an established global player with a robust business model and strong cash flow. It’s the third-largest business software provider in the world, used by over 6m people/businesses worldwide.
The company offers its products on a subscription basis and has an impressive 99% renewal rate since 2019. Sage saw its annual recurring revenue grow by 7.7% in the financial year (FY) 2021.
Using this cash, the company has been developing its cloud storage business, which is projected to be a $40bn industry by 2030. This venture brought in £997m last year, which contributed to the 5% annual revenue growth.
However, Sage Group primarily works with small and medium-sized businesses in the US, Europe and Asia. While its business management software sees strong renewal rates, a recession could change this. Rising bills will force businesses to cut extra costs, including software services.
But I’m still bullish on the firm given its cash-rich business model and strong global presence. Despite economic concerns, Sage’s financials make it a market leader. The tech firm is also reinvesting and expanding which is why it’s on my watchlist of top FTSE 100 shares.
Tested product, new market
Historically, businesses with an established business model and brand strategy have found it easier to expand into global markets. McDonald’s Corp’s highly successful model is the best example.
Burgers were largely unknown in Asian countries like India and Korea. But McDonald’s is now a major force in these countries. Thanks to targeted products and marketing, the fast-food chain has established thriving businesses in very diverse culinary markets. Airtel Africa (LSE:AAF) is doing the same thing with mobile connections.
Using the business model perfected by its parent company Bharti Airtel in India, the telecoms firm has become a premium service in Africa. The company quickly identified one key product that could put it above the competition.
By deploying Airtel Money, a mobile-to-mobile fund transfer service, Airtel Africa tapped into one of the world’s largest digital payment networks. This attractive, low-cost model has caused Airtel Africa shares to jump over 300% since the pandemic.
The biggest threat it faces is 5G expansion and growing competition. Africa is fast becoming a target for global business superpowers. Given the earnings potential for telecom firms in the region, Airtel Africa could be undercut by giants like Verizon when bidding for 5G bands in the future.
However, the company has been careful in securing some key territories that put it in a strong position going forward. I’m watching this FTSE 100 share very closely and could be tempted to make an investment in the coming months.