As 2023 rumbles on, I’m keeping a keen eye on any company announcements from FTSE 100 stocks that suggest things are looking up.
Ready to recover?
Housebuilder Barratt Developments (LSE: BDEV) is one example. It’s down to release its latest update on trading on 3 May.
As someone who has begun investing in the sector (albeit not here), I’ll be looking for signs that demand from would-be buyers has steadied and possibly even reversed.
Perhaps the latter might be asking for too much. After all, inflation remains stubbornly high, making it harder to say whether interest rates have peaked or not. And we know the market hates uncertainty.
Clearly, Barratt has no control over these things. However, a positive outlook statement could help to settle nerves, as could some comment on dividends. In the meantime, the stock looks cheap at seven times FY23 earnings.
Longer term, it’s also hard to get around the fact that the UK still requires a lot more new homes.
So, while it still pays to be cautious (and appropriately diversified), I’m of the opinion that there’s not been a better time to invest in a housebuilder like Barratt for many years.
Bucking the trend
The share price of luxury goods retailer Burberry (LSE: BRBY) has been in fine form, rising 25% in 2023 to date and 66% in the last 12 months (as I type).
That might seem surprising given that most people have been tightening their purse strings.
Then again, the reopening of China has likely proved a tailwind for coveted brands such as Burberry. After all, a decent proportion of its sales come from Asian markets and customers. And luxury demand in general has remained resilient.
As such, I reckon full year results on 18 May are likely to be embraced by the market. Better-than-expected performance by sector peer LVMH in Q1 certainly bodes well.
How much of this is priced in? Well, the shares aren’t the bargain they once were. However, a forecast price-to-earnings (P/E) ratio of 20 doesn’t yet feel unreasonable for such a quality company, despite the current economic headwinds.
I wouldn’t rule out further gains when final results are announced on 18 May and would be happy to buy today.
Hated FTSE 100 stock
One retailer whose fortunes have been going the opposite way is B&Q owner Kingfisher (LSE: KGF). After a lockdown-influenced purple patch, profits have been falling. The cost-of-living crisis hasn’t helped matters.
Nevertheless, the shares have actually held up rather well. Although flat compared to this time last year, they’re still up 7% in 2023 so far. That’s higher than the near-5% achieved by the FTSE 100 as a whole.
One could also speculate that the anticipation of warmer weather has pushed up demand for gardening supplies and furniture in recent weeks.
Even so, I can’t say I’m tempted to invest right now. Ominously, the company has just taken top spot in the table of most shorted stocks in the UK market. Put another way, a significant group of investors think the share price could be heading lower.
This sets things up for what could be a ‘interesting’ month for those already holding. An update is due on 24 May.
