A bull run is coming! I’ll invest £5k in 5 shares before the stock market rally

I want to be fully invested when the stock market rally finally arrives. I just wish I had the cash to buy every one of these FTSE 100 stocks today.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Young mixed-race woman jumping for joy in a park with confetti falling around her

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I got a taste of what a stock market rally feels like in the final days of last week. My self-invested personal pension (SIPP) recouped its January losses and then some, and I’m hoping for more excitement in the weeks ahead.

I don’t know when the bull run will arrive. Lately, it’s been a case of three steps forward, two steps back for the FTSE 100. That’s how it is to be an investor.

Yet I think we’re due one after a tough few years and may get it when the Bank of England cuts interest rates. Markets hope it lands in May. I think June is more likely. Time will tell.

I’m feeling bullish today

I’m hoping this will light a rocket under shares, but again, we’ll see. Right now, I’m enjoying last week’s bounce, and wondering which stocks will spearhead the recovery.

The FTSE 100 is full of dirt cheap, high-yielding financials. Barclays, NatWest and Lloyds Banking Group could fly if the bull run takes off. I hold Lloyds, so I hope so.

While lower interest rates may squeeze banks’ net interest margins they should also lower loan impairments. Cheaper borrowing costs should also revive the property market and mortgage lending.

Wealth managers like M&G and Schroders typically do well when markets rise, as net assets under management and net inflows increase. I hold M&G and will admire its blockbuster 8.75% yield while I wait for the share price to climb higher.

As economic sentiment picks up, cyclical stocks like FTSE 100 miners should follow. They’ve taken a beating as the Chinese economy struggles.

Glencore shares are down 21.26% over 12 months, while Anglo American crashed 44.74%. Both showed signs of life last week, rising 3.77% and 5.85%, respectively. When the bull market finally arrives, I’d expect them to join the stampede. As ever, there are no guarantees.

Beaten-down retail stocks could get a new lease of life too. Luxury fashion firm Burberry Group is at the top of my shopping list after crashing. I wanted to buy it a week ago but didn’t have the cash. It’s up 5.85% since. Annoying.

I’m ready for the recovery

Pest control specialists Rentokil Initial (LSE: RTO) caught my eye last October, when its share price crashed 30% in a month after warning of a slowdown in its North American operations, which remains a risk. Its European and emerging markets operations were still doing the business. But that wasn’t enough for investors, who bailed.

The only thing that stopped me taking advantage of the dip to load up on Rentokil shares at the time was a shortage of readies and the fact that they were still a little pricey, trading at almost 20 times earnings.

That’s roughly its valuation today, while the yield is relatively low at 1.78%. The outlook is brightening as the US economy holds up, and the stock jumped 7.89% last week. It’s still down 16.12% over one year so there’s an opportunity here.

If I had £5k to invest today I’d play the stock market recovery by purchasing Barclays and topping up my small stake in Phoenix. Then I’d buy Burberry, Rentokil and one more stock with comeback potential. There are an awful lot to choose from. Then bring on that rally.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Harvey Jones has positions in Glencore Plc, Lloyds Banking Group Plc, and M&g Plc. The Motley Fool UK has recommended Barclays Plc, Burberry Group Plc, Lloyds Banking Group Plc, M&g Plc, and Schroders Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

UK investors are piling into Vodafone! Should I buy this FTSE 100 stock?

This ultra-cheap FTSE 100 dividend stock has been very popular among retail investors lately. What might they be seeing in…

Read more »

Market Movers

This FTSE 250 value stock is up 11% today! Here’s what’s going on

Jon Smith explains why a FTSE 250 stalwart is shooting higher today on fresh news and talks through why this…

Read more »

Inflation in newspapers
Investing Articles

£276bn worth of reasons to invest in UK shares?

Our writer prefers investing in UK shares to holding cash. However, he acknowledges that this approach does carry some risks.

Read more »

Investing Articles

Here’s the latest growth and share price forecasts for Nvidia stock

Nvidia is due to report Q4 results towards the end of February. Should I buy the stock in anticipation of…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

Is the party over for the S&P 500 as Trump’s tariffs loom?

Donald Trump's planned tariffs have cast doubts on the future performance of the S&P 500. What should investors do now?

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

Warren Buffett continues to invest in this well-known pizza company

Warren Buffett just bought another 1.1m shares in Domino’s Pizza. Should investors follow him into the well-known fast food company…

Read more »

Investing Articles

A £100 weekly income from a Stocks and Shares ISA? It’s possible!

Mark Hartley details how a combination of good stock picks and patience could transform a Stocks and Shares ISA into…

Read more »

Young black colleagues high-fiving each other at work
US Stock

Why Apple stock could be set to soar with the new Alibaba partnership

Jon Smith explains why a new deal relating to the Chinese market could be good news for Apple stock, not…

Read more »