The FTSE 100 has made some considerable gains since Rishi Sunak came to office, despite ongoing challenges relating to inflation and a forecast recession.
And despite this environment, research from the Economic Forecast Agency (EFA) suggests that the FTSE 100 could push as high as 8,588 in March. This would represent a 13% increase from current levels. That would be nice.
However, this is the upper end of the EFA’s forecast. The research group contends that the index would likely close around 8,102 at the end of March. That’s still 9% above where it is today.
Upward pressure
The EFA is clearly pretty optimistic about near-term prospects for the FTSE 100. And so am I actually.
This year, the index has fallen and recovered to around 7,500. But it’s been an uneven recovery. We’ve seen oil and resource stocks surge — these company’s are disproportionately represented on the FTSE 100.
But other sectors have suffered, such as housebuilding, retail, manufacturing, and banking, all fairing poorly by comparison to resource stocks.
And as investors, we’re often trying to assess what the market will look like in six-to-12 months. So while the coming months might look pretty bleak, I can see why investors might have a much more optimistic outlook in March.
By spring, I’m hoping the end of the recession will be in sight.
Recovery picks
So with the market possibly poised to recover, I’m looking at two stocks from underperforming sectors.
My first pick is Spire Healthcare (LSE:SPI). Medical stocks have underperformed since the start of the pandemic. There are several reasons for this, but first among them is the Covid-related disruption. National resources were put towards treating the pandemic, not replacing hips, and the virus caused costly cancelations.
But things are looking up for Spire. In September, the private hospital operator said revenues in the six months to 30 June had risen 7% to £597.9m, while adjusted EBITDA was ahead 10.2% at £105.8m.
The firm, which has 39 private hospitals and eight clinics, said there was “significantly increased demand for healthcare, with 6.7m people nationally awaiting treatment“.
The economic environment could negatively impact demand in the near term. However, I do see demand for healthcare as being less elastic than other services. That’s why I’ve recently bought more shares in Spire Healthcare.
My second pick is Hargreaves Lansdown. This stock has suffered in 2022. Growth unsurprisingly slowed following the unique pandemic-induced environment and the cost-of-living crisis may cause investors to reduce their investments.
However, looking further afield, Hargreaves is well placed to take advantage of trends. Notably more people investing, and more people taking control of their own investments. The supermarket for funds and stocks is already the UK’s most used platform and, in my opinion, for good reason.
I’ve recently bought more Hargreaves stock for my portfolio.
