Although the FTSE 100 index contains the UK’s biggest public companies by market capitalisation, it’s still packed with some compelling stock opportunities.
It’s easy to believe that larger businesses might be slow-moving and make pedestrian investments. For example, I’ve heard people liken big-cap companies to elephants that don’t gallop!
Big gains are possible
That’s not necessarily right, though. Sometimes Footsie companies can put on an impressive turn of speed. In 2023, one prominent example was Rolls-Royce Holdings. The company’s share price rose by just over 200% through 2023.
A turnaround in the underlying business prompted the move higher. Meanwhile, City analysts have suggested more double-digit growth in earnings ahead for 2024.
There could be more gains ahead for Rolls-Royce shareholders as the business grows. Although I’m not expecting the stock to deliver advances as spectacular as last year’s again in 2024.
However, Rolls-Royce is a good example of the potential of some of the businesses in the FTSE 100. All we need to do now is find some more opportunities within the index.
Steady growth in earnings
I like the look of science-led biopharmaceutical company AstraZeneca (LSE: AZN). Analysts predict double-digit percentage growth in earnings ahead. But the stock is down from its highs of last year:
With the share price near 10,550p, the forward-looking earnings multiple for 2024 is just over 15. That looks like a reasonable valuation to me and compares to an average for the Footsie running around 14.
Meanwhile, the firm’s vibrant research and development (R&D) pipeline has been spitting out strong-selling new medicines that have been driving profit growth for a few years now.
Of course, there’s no guarantee earnings will keep on expanding. The R&D pipeline could even dry up. If that scenario plays out and earnings contract, the stock will almost certainly go lower.
Nevertheless, recent outlook statements have been upbeat and optimistic. On top of that, the directors have been enhancing organic growth with a steady stream of bolt-on acquisitions.
On balance, I’d be keen to dig into this stock opportunity with deeper research and consider buying some shares with a five-year+ holding period in mind.
Others to research now
However, I also like some companies linked to retail consumers. In general, my guess is the sector could build momentum in the coming years if people end up with more money in their pockets because of an improving economy.
With that theory in mind, the acquisitive growth strategy at retailer Frasers Group appeals to me. I also like the idea of researching the potential of Switzerland-based bottler of Coca-Cola products, Coca-Cola HBC.
Both those enterprises strike me as quality operations with potential for further growth ahead, as does Pearson. It operates in the education, assessment and certification markets.
All businesses can face challenges from time to time and their shareholders can lose money. Nonetheless, I’d consider FTSE 100 companies like these to diversify an investment of £7,000 as part of a larger portfolio of positions.
