Why RSA Insurance Group plc, Associated British Foods plc and ARM Holdings plc Should Beat The FTSE 100 Today

The FTSE 100 (FTSEINDICES: ^FTSE) added 24p to 6473p this morning after five straight sessions of falls. Volatility was somewhat subdued, suggesting investors’ concerns are easing, with some leading shares trying to rally. While investors remain cautious ahead of Thursday’s  European Central Bank meeting and Friday’s US jobs numbers, there were positives in the form of a rise in Asian markets, with Wall Street regaining a stable footing. So far the index has dropped 4% in 2014.


The insurance provider received a boost after news that it had appointed former RBS boss Stephen Hester as new chief executive, replacing Simon Lee who quit in December. The shares of RSA (LSE: RSA) added 6p to 105p upon the news.

After issuing two profit warnings in a week halfway through 2013, the group saw shares plummet 28% by the end of the year. RSA hopes that Mr Hester’s track record of transforming business, and the implementation of a new agenda, will deliver value for shareholders and customers.

Associated British Foods

The shares of Associate British Foods (LSE: ABF) added 103p during early trade this morning — an increase of around 4%. This follows comments from Morgan Stanley suggesting investors are mis-pricing clothing business Primark. On its own Primark could be worth more than its parent company, with a market cap of £30 billion as a standalone business, while AB Foods has a market cap of £21 billion.

Primark, which trades at 36 times earnings, is currently enjoying strong sales and generates a third of AB Foods’ revenue. Growth stories in the retail space have been traditionally undervalued and analysts believe Primark could propel shares in Associated British Foods higher.


ARM (LSE: ARM) was the leading market faller yesterday. The chip designer, whose technology is used by Apple and Samsung, posted a net loss for its fourth quarter, hit by higher operating costs. The stock slumped 55p to 875p.

The company is highly rated however, and with a strong order backlog into this year, investors are spotting an opportunity to get in cheap: ARM has thus far recovered by 3.5% to 904p.

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> Mark does not own shares in any company mentioned.