In January, AJ Bell looked at all of the FTSE 100 recommendations made by UK brokers. The investment platform then ranked the selections based on the proportion of ‘experts’ advising their clients to buy each stock.
Top of the league
Number one on the list was Games Workshop, although it’s important to note that the games and miniature figures group was only covered by three brokers. Even so, its year-to-date return has been nearly four times higher than the FTSE 100 index.
Since 1 January, only five of the 10 have outperformed the Footsie. Of course, there’s no need to panic because, in my opinion, successful investing requires taking a long-term view. But AJ Bell’s analysis does illustrate there are no certainties in the world of stocks and shares.
| Stock | Analysts (number) | % Buy recommendations | Share price change (%) |
|---|---|---|---|
| Games Workshop Group | 3 | 100 | +15 |
| Prudential | 15 | 93 | +37 |
| Beazley | 14 | 93 | +11 |
| Intermediate Capital Group | 16 | 88 | -3 |
| Glencore | 15 | 87 | -26 |
| DCC | 13 | 85 | -8 |
| Informa | 12 | 83 | -1 |
| Barclays | 17 | 82 | +20 |
| IMI | 17 | 82 | +6 |
| Marks & Spencer | 16 | 82 | -8 |
No crystal ball
For example, it’s impossible to accurately predict metals prices or the global demand for commodities. Concerns over both of these variables have probably played a part in the disappointing share price performance of Glencore.
And then there’s poor old Marks & Spencer (LSE:MKS), the food and fashion retailer. On Easter Monday, details emerged of an attack on its IT systems.
On 25 April, events took a turn for the worse. As a result, the company decided to “pause” taking orders via its website and app. However, customers were still able to browse online and all of its stores were open as normal.
Subsequently, newspapers reported exhausted staff sleeping in its head office and bosses having to use their personal phones to communicate with one another.
On 13 May, it was revealed that some customers’ personal data had been stolen. To be fair, none of this could have been predicted.
An expensive business
However, the financial consequences for Marks & Spencer are likely to be significant. In 2024, online revenue in its clothing and home division was £1.22bn, around £3.3m a day. At this stage, it’s unclear how much might be reclaimed from its insurers.
And shareholders have suffered too. The group’s share price is now 14.5% below its 52-week high. However, since May 2020, it’s still up an impressive 29%.
But now could be a good time to buy the stock. Although the cyberattack’s been disruptive – and potentially expensive – I don’t think the business has fundamentally changed. Having said that, its reputation has taken a bit of a knock.
However, I’m confident the group will have learned its lesson and improved its IT systems. I reckon another successful attack’s unlikely.
And there are other reasons why I like the stock. The group’s been working hard to refresh its product lines and has closed some loss-making stores. Also, it had another good Christmas with like-for-like food sales up 8.9% and clothing 1.9% higher.
For its 2025 financial year, analysts are forecasting earnings per share of 28.98p. If correct, this implies a forward price-to-earnings ratio of 12.3, which is similar to other high street retailers.
But fashion retailing’s a tough business. Consumer tastes can change quickly leaving plenty of unsold stock. In addition, the company’s dividend is on the mean side.
Personally, I think the cyberattack’s an unfortunate blip from which the group will soon recover. And due to its iconic brand, reasonable valuation and strong food sales, M&S could be a growth stock for investors to consider.
