I think these three FTSE 100 shares might leap again in value in the New Year. If I invested £10,000 in each one, and their share prices rose by the same percentage as they did in 2023, I could (excluding dividends) make a healthy £4,350 profit next year alone.
Here’s why I’d buy these shares in January and look to hold them for the long haul.
Bargain beauty
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Consumer spending remains under severe pressure as higher-than-normal interest rates persist and the UK economy slows. This was underlined by VoucherCodes data that showed Boxing Day sales were expected to slip 3% year on year to £3.7bn.
In this tough climate, budget-focused retailers like B&M European Value Retail (LSE:BME) can expect to have another cracking year. This is despite the ongoing problem of elevated labour and product costs.
The retailer’s share price leapt by around 40% in 2023 as shoppers rushed into its stores. Its last financials showed revenues and adjusted operating profit up 10.4% and 19.1% respectively between April and September, with like-for-like sales at its flagship B&M stores 6.2% higher year on year.
B&M offers big-name brands at cheaper prices, which has inspired fresh loyalties during the cost-of-living crisis.
Adam Vettese, analyst at eToro
This strong trading encouraged the FTSE firm to raise its full-year forecasts. It also prompted the company to accelerate its store expansion programme, a move that could give long-term sales and profits growth a significant boost.
The company now hopes to have “not less than 1,200 B&M UK stores in total” within the next few years, up from a prior target of 950 (and the current total of just over 700). Its recent share price momentum could have much further to run.
Fabulous foodie
Associated British Foods (LSE:ABF) is another FTSE 100 share with exceptional defensive qualities. These have driven its share price 47% higher over the last calendar year.
As the name implies, this UK blue-chip company sells a wide range of edible goods under popular brands like Twinings (tea), Kingsmill (bread) and Jordans (breakfast cereals). It also sells ingredients, sugar and agricultural products.
But ABF’s undisputed jewel in the crown is its Primark value fashion retail division. As with B&M, shoppers are flocking to its stores as the cost-of-living crisis rolls on. And the company is investing heavily in new store rollouts and its digital platform to take earnings to the next level.
Sales at Primark rose 17% to £9bn during the 52 weeks to 16 September. This in turn delivered group sales growth of 16.2% year on year, and an 8% improvement in adjusted pre-tax profit.
The strong financial performance means there’s plenty of room to return excess cash to shareholders, with a special dividend and new £500m buyback programme on the way.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown
Value retail is growing strongly all over the globe. And ABF’s plan to boot its footprint across Europe and the US will put it in a better position to exploit this.
A competitive trading landscape could threaten profits growth. But on balance I think Associated British Foods has all the ingredients to have another blockbuster year.
