Between 1 January and 28 February, the top five FTSE 100 shares with AJ Bell’s clients were (in order) Glencore, Phoenix Group Holdings, Taylor Wimpey, JD Sports Fashion (LSE:JD.), and SSE. The list is based on the net inflows of funds so it also takes into account those selling each stock.
In my opinion, it’s never a good idea to buy shares just because they are popular with others. There’s no substitute for doing your own research. After all, how do I know that those backing a particular stock have taken the time to study the company’s prospects and those of the industry in which it operates? However, league tables of popular shares can be a good starting point for picking shares.
Bargain hunting
Four of the stocks are currently (17 March) trading within 6% of their 52-week lows. It looks to me as though investors are seeking out bargains.
| Stock | Share price (pence) | 52-week low (pence) | % above 52-week low |
|---|---|---|---|
| Glencore | 321 | 309 | 3.9 |
| Phoenix Group Holdings | 568 | 473 | 20.0 |
| Taylor Wimpey | 113 | 107 | 5.6 |
| JD Sports Fashion | 74 | 71 | 4.2 |
| SSE | 1,521 | 1,447 | 5.1 |
JD Sports is the closest to its one-year low. And to be honest, I’m pleased that it’s on the list. That’s because I already own shares in the sports leisure retailer. I first bought them in the summer of 2024. Two profit warnings later, I’m now sitting on a large paper loss. At the time, I thought they were a bit of a bargain. Now, I think they are even more so.
And if I’d some spare cash, I’d buy more.
Pros and cons
For the year ending 1 February 2025 (FY25), the company’s expecting a profit before tax and exceptional items of £915m-£935m. If this proves to be correct, earnings per share (EPS) will be around 12.2p. And this implies a forward price-to-earnings (P/E) ratio of 5.95.
On 31 May 2024, when the company published its FY24 results, it reported EPS of 10.45p. Then, its P/E ratio was 12.2.
If the company was valued on the same basis today, its share price would more than double.
But the outlook for retailers, particularly in the UK, looks uncertain. The economy appears fragile and inflation is still above the Bank of England’s target. Also, JD Sports’ dividend is tiny.
However, the group has recently expanded into the US and Europe so it’s less exposed to the UK than previously.
And despite facing fierce competition, the company managed to increase its margin during the third quarter. This tells me that the brand remains strong. It didn’t engage in discounting over the Christmas period yet saw an increase in like-for-like sales, compared to 2023.
A quick look at the others
At 10.8%, Phoenix Group’s shares are the furthest away from their 52-week low. This has been helped, in part, by yesterday’s upgrade to its 2025-2026 earnings forecasts. Another reason for its popularity could be its generous dividend. Based on the amount declared for 2024, it’s yielding a very impressive 9.3%.
At 8.4%, Taylor Wimpey’s the next best. I reckon those buying the stock are confident of a housing market recovery.
As with all miners, Glencore’s earnings are at the mercy of volatile commodity prices. To address what they believe is an under-appreciation of what the group’s worth, its directors are threatening to move its listing to the US.
Finally, with its emphasis on renewable energy, SSE is hoping to benefit from the transition to net zero.
