Polymetal International plc and Travis Perkins plc set for FTSE 100 exit

Polymetal International plc (LON:POLY) and Travis Perkins plc (LON:TPK) are set to be ejected from the FTSE 100 (INDEXFTSE:UKX) but which companies will replace them?

| 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.

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.

Gold and silver miner Polymetal International (LSE: POLY) and building supplies firm Travis Perkins (LSE: TPK) are set to be demoted from the FTSE 100 when the FTSE committee announces the results of its final quarterly index review of 2016 on Wednesday.

Contrarian opportunities?

Polymetal was promoted to the FTSE 100 as recently as September, having made strong gains on the back of a resurgence in gold and silver prices. However, precious metals have since gone off the boil and Polymetal’s shares have fallen back a fair bit.

At yesterday’s market close the shares were at 769p, valuing the company at £3.28bn and ranking it at 120 in the FTSE All-Share index. A rank below 110 at the cut-off time (which is the close of trading today) means an automatic exit from the FTSE 100. The shares are trading at 765p as I’m writing, so Polymetal is heading for demotion to the second-tier FTSE 250.

The company has a good production growth and costs profile and is trading on a current-year forecast P/E of 9.2, falling to 8 for 2017. As such, the shares look very buyable to me at this level.

Travis Perkins was ranked at 115 in the All-Share index at yesterday’s close, with a market cap of £3.45bn at a share price of 1,378p. The shares are lower today — 1,350p as I’m writing — so this company is also set for automatic demotion to the FTSE 250.

The EU Referendum result hit Travis Perkins’ shares hard and a rally through July and August soon went into reverse. In a trading update in October, the company said it would be closing over 30 branches and pursuing supply chain efficiencies as it looks ahead to an uncertain 2017. Travis Perkins’ forward P/E of 11 isn’t cheap enough to tempt me, because I see a significant risk of earnings downgrades.

Newcomers

Convatec is in pole position to enter the FTSE 100. “Who?,”  I hear you say.  

Convatec was only floated on the stock market last month and is a medical products and technologies company focused on therapies for managing a number of chronic conditions, including advanced wound care.

The company has a market cap of £4.67bn at a share price of 239p, which is big enough to give it automatic entry to the top index, in which it will rank at number 88. This could be an interesting alternative to Smith & Nephew — the only current blue chip in the health care equipment & services sector — but I haven’t seen much analyst coverage of it so far. It’s one I’ll be keeping an eye on.

Finally, Smurfit Kappa just missed out on promotion to the FTSE 100 at the last quarterly review but looks set to join the elite this time round. If so, it will provide Footsie investors with an alternative packaging sector option to index incumbent Mondi.

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.

G A Chester has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

The market is wrong about this FTSE 250 stock. I’m buying it in April

Stephen Wright thinks investors should look past a 49% decline in earnings per share and consider investing in a FTSE…

Read more »

Black father and two young daughters dancing at home
Investing Articles

1 FTSE 250 stock I own, and 1 I’d love to buy

Our writer explains why she’s eyeing up this FTSE 250 growth phenomenon, and may buy more shares in this property…

Read more »

View of Tower Bridge in Autumn
Investing Articles

The FTSE 100 is closing in on 8,000 points! Here’s what I’m buying before it’s too late!

As the FTSE 100 keeps gaining momentum, this Fool is on the lookout for bargains. Here's one stock he'd willingly…

Read more »