We asked our team of contract writers which stocks they believe will be members of the FTSE 100 before too long. Without further ado, here are their nominations!
4imprint Group
What it does: 4imprint helps to design and manufacture promotional products and merchandise, selling to both to corporates and individual consumers.
By Jon Smith. 4imprint (LSE:FOUR) currently sits in the FTSE 250, but has seen its market cap rise recently. This has largely been down to the impressive 80% rally in the share price over the past year.
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The business has been going from strength to strength, with revenue for 2022 up 45% on the previous year. It has a relatively simple business model, but executes on strategy efficiently and quickly. This is helping it to grow customers, particularly in the US and Canada (where its largest markets are).
I feel the company can grow even more by opening up the UK market and the rest of Europe. With no debt on the books, I see limited risk of cash flow problems. However, one concern I do have is the large dividend being paid out. I’d rather see this retained in the firm to help support further expansion.
Jon Smith does not own shares in 4imprint.
easyJet
What it does: easyJet provides flights and package holidays, principally in Europe.
By Paul Summers: Shares in budget airline easyJet (LSE: EZJ) are up by around 50% in 2023 so far. I think there could be more to come.
In May, the company announced that revenue over the first six months of the financial year had jumped 80% and was expected to keep climbing.
Even more positively, analysts think the £3.7bn cap will swing from a substantial pre-tax loss in the first half to a pre-tax profit of £345m for the full year. Any sign of it beating the latter will surely generate a stampede from investors for the stock.
But none of this can be guaranteed. Like every company in this sector, easyJet is vulnerable to fuel prices and potential strikes by air traffic controllers. There’s no dividend stream either.
So, while I’m confident the Luton-based business will fly back into the FTSE 100, delays can’t be ruled out.
Paul Summers has no position in easyJet.
Games Workshop
What it does: Games Workshop designs and manufactures miniature figures and wargames and sells these online and via stores and independent retailers.
By Ben McPoland. I reckon that Games Workshop (LSE: GAW) could one day ascend into the hallowed realm of the FTSE 100. A number of things make me think this.
First, the company has a very devoted and engaged fan base. I can’t imagine this growing global army of customers deserting their beloved niche hobby. That said, their patience is sometimes tested with the firm’s semi-regular price increases, which could ultimately be a fly in the ointment.
Second, the firm has an attractive profit margin, possesses an excellent balance sheet and regularly rewards shareholders with cash dividends. All these are ingredients for share price appreciation.
Third, it still seems to be in the early stages of monetising its intellectual property. A recent agreement with Amazon Studios to produce a Warhammer 40k movie and TV series could bring in loads more fans (and money).
Finally, Games Workshop is already a £3.1bn enterprise. A 50% share price rise could be enough to bag it a blue-chip Footsie listing.
Ben McPoland owns shares in Games Workshop.
Games Workshop Group
What it does: Games Workshop manufactures market-leading miniatures and tabletop gaming systems such as Warhammer 40,000
By Royston Wild. Games Workshop (LSE:GAW) is a business whose fantasy products attract a cult following. I expect profits here to soar as it expands internationally and ramps up licensing of its intellectual property (IP) across mass media.
The FTSE 250 company started as a mail-order business in 1975 and opened its first shop in London three years later. Today it has 507 stores spanning Europe, North America and Asia and a sophisticated online operation.
The firm’s Warhammer products are widely viewed as the best in the sphere of tabletop gaming. This provides it with exceptional protection against competition. As global interest in the fantasy genre grows, I expect demand for its miniatures and books to trek steadily higher.
I’m especially excited by Games Workshop’s agreement with Amazon last year to make programming based on its IP. This could send royalty income through the roof and supercharge product sales as legions of new fans come onboard.
Royston Wild owns shares in Games Workshop.
Marks and Spencer
What it does: Marks And Spencer is one of the oldest retailers in England. It specialises in selling premium food products, clothing items, beauty, and home products.
By John Choong. Having almost doubled in value since October, Marks and Spencer (LSE:MKS) shares could be heading for a fashionable return to the FTSE 100 later this year.
The retailer’s most recent full-year results blew expectations out of the water, as the company beat analysts’ consensus on every front. M&S witnessed incredible sales growth over the past year despite the cost-of-living crisis. More promisingly, dividends will be reinstated later this year, sparking cheers all around.
Consequently, Marks and Spencer has grown its market share in both its food and clothing segments despite the tough times. Thus, the massive rise in its share price is testament to the incredible progress management has made in the group’s turnaround.
That said, headwinds surrounding wholesale food and labour costs still persist, and could impact profits in the near term.
Nonetheless, considering the firm’s ability to navigate through such a difficult year, I’m confident in its ability to make a swift return to Britain’s premier index sooner rather than later.
John Choong has positions in Marks and Spencer.
