So, with a new all-time high, the US has officially been in a bull market since October 2022! Will we ever see one again in the UK? Judging by history, the answer ought to be a resounding ‘yes!’ And savvy Fools will know that the time to be buying shares in the best FTSE-listed companies isn’t when a new bull market is declared, but rather when the momentum isn’t obvious, and as stocks look cheap. Perhaps like these four firms, hand-picked by a number of our free-site writers…
Hargreaves Lansdown
What it does: Hargreaves Lansdown is a financial services company that provides the UK’s most popular DIY investment platform.
By Dr James Fox. During bull markets, certain types of companies often lead the upward trend.
While market dynamics can vary, some common characteristics of companies that tend to perform well during bull runs include technology and innovation, cyclical stocks, and consumer discretionary.
So, I’m picking Hargreaves Lansdown (LSE:HL.). It might be a financial services company, but it’s also a tech stock, and one of the leading innovators in the do-it-yourself investment space.
However, despite record earnings, shares in the FTSE firm has slumped since the pandemic amid falling investor dealings and low investor sentiment.
A bull run would change this entirely, with sentiment picking up and investor dealing likely surging.
The perennial concern is that Hargreaves isn’t doing enough to fight off competition. I agree that it could do more, but it’s in such a commanding position with over 40% of market share.
I’d expect Hargreaves to perform well during a bull market, but I also want to see the company do more to attract new customers in the long run.
James Fox owns shares in Hargreaves Lansdown.
JD Sports Fashion
What it does: JD Sports Fashion operates around 3,350 premium sportswear shops across North America, Europe and Asia.
By Royston Wild. Athleisure — or sports casual, as it used to be known — retailer JD Sports Fashion (LSE:JD.) hasn’t had the best of it in recent times.
Reflecting trading troubles in its US markets, the FTSE firm’s share price is down 27% over the past year. I’m expecting it to bounce back when economic conditions improve and consumer spending reignites, however.
The rock-bottom valuation of JD shares certainly give it scope to recover strongly. Today it trades on a forward price-to-earnings (P/E) ratio of 8.6 times, well below its five-year average of around 17 times.
Demand for premium athleisure products has been growing steadily for the past decade. And analysts are tipping this trend to continue, one which JD is seeking to exploit by boosting its store portfolio.
This blend made JD the best-performing current FTSE 100 stock of the past decade, according to Hargreaves Lansdown. Over the period it delivered a total return of 1,068%. I believe recent share price weakness provides an attractive dip buying opportunity.
Royston Wild does not own shares in JD Sports Fashion.
RELX
What it does: RELX provides analytics and decision tools. It operates in four areas: risk, scientific, legal, and events.
By Stephen Wright. I’m in two minds as to what I think is going to be the catalyst for the next bull market. It’s either going to be falling interest rates, or the growth of artificial intelligence.
If it’s the latter, then I’d expect RELX (LSE:REL) to be leading the way. The company is – in my view – the UK stock with the most legitimate AI credentials.
The firm’s products provide both data and analytics tools to help businesses make better decisions. This can involve evaluating risk, improving efficiency and productivity, or providing regulatory information.
From my perspective, the biggest risk with the stock is that the market might already know this. At a price-to-earnings (P/E) ratio of 30, it’s not like this company is going under the radar with investors.
Nonetheless, for investors with a long-term view, I think the underlying business makes the stock attractive. And I wouldn’t be surprised to see it leading the charge in the next bull market.
Stephen Wright does not own shares in RELX.
Scottish Mortgage Investment Trust
What it does: Scottish Mortgage Investment Trust aims to identify, own and support the world’s most exceptional growth companies.
By Paul Summers. I had hoped the rally in UK shares – and FTSE 100-listed investment trust Scottish Mortgage (LSE: SMT) in particular – would continue into 2024. So far, it’s been a damp squib, probably because interest rate cuts look destined to come later than once hoped.
Still, I’m optimistic that the stocks the trust holds will be back in demand eventually. Falling rates are just the sort of thing these disruptive growth businesses like because it means lower borrowing costs.
One big question mark hanging over the trust specifically is whether it’s right to hold almost 30% of the portfolio in private companies. These are tricky to value and there’s a concern Scottish Mortgage may have overpaid to own stakes in them.
Then again, a revitalised IPO market in which some of these look to join the market could be enough to rebuild confidence and push the trust’s share price back up.
Paul Summers owns shares in Scottish Mortgage Investment Trust
