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3 FTSE 100 shares I’ll be watching closely in January

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After a rollercoaster 2020, most investors are probably looking forward to time away from the markets. They shouldn’t get too comfortable for long. No sooner is December over do we get updates from some of the biggest companies on the London market. Here are three FTSE 100 I’ll be watching particularly closely in January. 

Beating expectations

One of the earliest companies to report in 2021 is clothing retailer Next (LSE: NXT). It’s scheduled to provide an update on trading over the festive period on January 5.

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I suspect the shares could do well on the day, assuming the retailer hasn’t been affected too much by the ongoing coronavirus-related restrictions. Its last statement was particularly bullish.

The company reported in October that trading over Q3 had been better than expected. Full-price sales were up 2.8%. As a result, the FTSE 100 member upgraded its guidance on full-year profit to £365m — £65 more than its estimate just one month earlier.

This isn’t to say the Next share price won’t see some action before January. News that it has made a formal bid for Topshop owner Arcadia could get investors excited or nervous, depending on the size of the offer.

Trouble ahead?

Another FTSE 100 stock I’ll be watching closely next month is housebuilder Persimmon (LSE: PSN). The company is down to issue a trading update on 13 January.

Given the roaring UK property market, I’d expect a lot of positive news to be revealed and Persimmon’s share price to rise accordingly.

Having said this, it might not last long. I’m inclined to agree with my Foolish colleague Harvey Jones when he recently suggested we could see a housing market crash in 2021.

As he reflected, the stamp duty holiday can’t go on forever. When it does end, we could witness a notable decline in activity. Factor in more economic turmoil caused by the coronavirus pandemic, Brexit, or both, and house prices could finally lose momentum. In such a scenario, it seems fair to assume that shares in estate agents and housebuilders will suffer too.

Persimmon holders should do well over the long term but I’m not sure I’d want to get involved right now. 

Short favourite

A final FTSE 100 share I’ll be monitoring in January is Sainsbury’s (LSE: SBRY). The UK’s second-largest supermarket chain is also down to release a trading statement on 13 January.

Since we can’t exactly travel far over the festive period, I’d assume that families are consoling themselves with an extra-large feast at home this year. This should make for some very healthy pre-Christmas trading for Sainsbury’s. 

Nevertheless, I still see the stock as something of a value trap. The £5bn-cap has seemed rather lacking in direction since its proposed merger with Asda was blocked back in 2019. It lacks Tesco‘s dominance, Morrisons‘ connections with Amazon and the nimbleness of the German discounters (Aldi and Lidl).

Based on the amount of short interest in Sainsbury, it would seem I’m not alone in thinking this. Forebodingly, it’s the fourth most shorted company on the London Stock Exchange. If my shares were only slightly less hated than those of Premier Oil, Pearson, and Cineworld, I’d be worried. 

Finishing 2020 at pretty much the same price as they began, I submit ‘smart money’ on Sainsbury’s shares has already been made.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK owns shares of Next. 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.

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