This has been a volatile year for global stock markets yet the FTSE 100 index has kept its cool, standing roughly where it began in January.
As I write this, it trades at 7,445, down just 0.93% year-to-date compared to a thumping 18.7% drop on the US S&P 500. That’s impressive given the troubles we’ve seen in 2022 but next year could be brighter still, according to AJ Bell. The investment platform is predicting that the FTSE 100 will hit an all-time high of 8,250 in 2023.
Incentive to invest
That’s 10.81% higher than today, which would give me a real incentive to buy FTSE 100 shares, if I actually needed one (which I don’t).
As I’ve written before, I went on a spree in October and November when the index dipped below 7,000. I’m now the proud owner of Persimmon, Rio Tinto and Rolls-Royce, all of which are nicely in the black already.
I called a halt after buying Lloyds Banking Group earlier this month, on remembering that Christmas is coming and loved ones expect gifts. Now I’m quietly building my watchlist, ready to swoop in the New Year.
Private equity firm Intermediate Capital Group is right at the top of the list, like a twinkly fairy on a tree. It looks cheap to me, having fallen more than 40% this year to trade at just 6.67 times earnings while yielding 6.34%. I’m hoping there won’t be a Santa rally this year, in case it makes the stock more expensive come January.
Insurer and asset manager Legal & General Group is next in line. I’ve been meaning to buy it for ages and now looks like a good time, with the share price down 10% this year. L&G trades at just 7.56 times earnings and yields a mighty 7.24%. Just writing down those figures makes me want to buy it right now. Maybe I can cut a few people off my Christmas list!
I’m buying cheap UK shares
Consumer goods giant Unilever is number three on my watchlist. Trading at 18.43 times earnings and yielding 3.53%, it looks better value than it has for years. That’s despite its share price rising 16% in the last six months.
I’d be thrilled if the FTSE 100 it hits 8,250 next year, but only after I’ve filled my boots with bargain-priced stocks like these.
Naturally, there’s no guarantee that the Footsie will break new highs. It could just as easily test recent lows by crashing below 7,000 again. Nobody can second-guess stock market movements, even if it’s fun having a pop at this time of year.
But where the index goes over the next 12 months isn’t particularly relevant for me, because my investment timeframe is 15 to 20 years, and ideally longer. Loads of shares look cheap today, I just wish I had the cash to buy them all.
