3 FTSE 100 shares I’ll be watching like a hawk in February

Paul Summers picks out three FTSE 100 (INDEXFTE:UKX) shares he’s interested in that are likely to hit the headlines next month.

| 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.

Young Black woman looking concerned while in front of her laptop

Image source: Getty Images

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.

January has been pretty kind to UK investors. Since markets can often turn on a dime however, here are three FTSE 100 shares I’ll be keeping a close eye on next month.

Shell

UK-listed companies don’t come much bigger than oil major Shell (LSE: SHEL). In fact, the company’s value has jumped over 20% in the last 12 months, largely as a result of the Russia/Ukraine conflict.

I’ll be interested to see whether full-year results on 2 February move the stock even higher. My inkling is that momentum may begin to slow.

That might sound odd given that analysts expect net profit for 2022 to be almost double that achieved in 2021. Relative to the whole market, the shares still look cheap too (6 times forecast earnings).

But as good as it’s been over the last year, there are things that make me uncomfortable. Holders must always contend with the infamously volatile price of oil. And even when things are going well, firms in this sector can be forced to pay higher taxes on profits (and will in 2023). Oh, and adapting its business to the clean energy revolution will take time and money.

Sure, the 3.9% yield and share buybacks are attractive. As a stock for long-term capital growth however, Shell doesn’t make my shortlist.

Unilever

Another top-tier member I’ll be paying attention to is consumer goods giant Unilever (LSE: ULVR).

Thanks to its portfolio of brands that people habitually buy, this company has long been adept at riding out periods of economic strife better than most.

Nevertheless, I’m wary that many shoppers have been shifting to cheaper alternatives in 2023. We’ll find out how this has impacted Unilever when it releases its results for 2022 and comments on its outlook on 9 February.

I suspect this is why the shares have been fairly flat in 2023 to date. The still-not-cheap price-to-earnings (P/E) of 18 may also be a factor.

Then again, Unilever shares could do well this year if the slowdown isn’t as bad as initially thought. Regardless, returns over the decades have been excellent. And that’s what matters to me.

If I had the spare cash, I’d be comfortable buying the stock prior to results day.

Centrica

A final FTSE 100 share I’ll be watching next month is British Gas owner Centrica (LSE: SSE).

Like Shell, the company enjoyed a stellar 2023, thanks to rising prices. Go further back and Centrica’s value is up roughly 200% since the first UK lockdown in March 2020.

But let’s put things in context. Centrica was an absolute dog prior to the pandemic. Indeed, the stock is still down by almost 30% in the last five years. Ouch!

Still, the £5.8bn-cap is proof that I can make great profits if I’m brave enough to buy and hold out-of-favour stocks and my timing is (fortuitously) good.

The company is also a lot leaner and cash-rich than it used to be. The latter could mean a boost to the dividend, which could drive the share price even higher next month in turn. Full-year numbers are due on 16 February.

Then again, I also expect some profit-taking at some point. A larger-than-expected fall in inflation could be one catalyst.

As such, I wouldn’t be a buyer now.

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.

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Unilever Plc. 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.

More on Investing Articles

US Stock

The Nvidia share price falls! Here’s what I think happens next for the S&P 500

Jon Smith reviews the overnight results from Nvidia and explains why this could stall the S&P 500 performance through to…

Read more »

Investing Articles

Down 15% today, is this FTSE 100 share too cheap for me to miss?

JD Sports' share price has tanked after the FTSE 100 share released another profit warning. Is this the opportunity I've…

Read more »

Investing Articles

Up 8% today, is this FTSE 100 growth stock a slam-dunk buy for me?

Halma's share price is soaring thanks to another headline-grabbing trading update. Is the FTSE 100 stock now too good for…

Read more »

Investing Articles

With a P/E ratio of just 10.5 is now a brilliant time to buy a cut-price FTSE 250 tracker?

Harvey Jones says a recent dip in the FTSE 250 leaves the index trading at bargain levels. One stock in…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

To build a passive income flow, I’d follow this Warren Buffett approach

Warren Buffett has set up passive income streams most people can only dream about. Our writer sees some practical lessons…

Read more »

Growth Shares

As the boohoo share price falls, could it become a penny stock in 2025?

Jon Smith outlines some of the recent problems involving the boohoo share price and considers if things could get even…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

Here are the worst-performing FTSE 100 shares over the last 5 years

These five FTSE 100 shares have been complete duds over the last half decade. But is there potential for a…

Read more »

Investing Articles

Nvidia stock has tripled this year! Can it keep rising?

Nvidia's latest sales update showed strong growth and the stock's been on a tear so far in 2024. So is…

Read more »