3 top FTSE 100 stocks I’d watch in October

Roland Head turns the spotlight onto three FTSE 100 (INDEXFTSE: UKX) stocks that could move markets this 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.

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.

Where should you watch for market-moving news in October? In this article, I’ll focus on three FTSE 100 companies that could move the needle this month.

Takeover battle could drive price higher

The share price of London Stock Exchange Group (LSE: LSE) has risen by 35% over the last three months thanks to two audacious takeover proposals.

LSE shares jumped at the end of August when news emerged that the firm was making a $27bn bid for financial data firm Refinitiv, which was previously known as Thomson Reuters.

The logic behind the deal seemed sound and shareholders were broadly positive, despite the steep price tag. I can certainly see the attraction of controlling this big data business for LSE. I reckon it’s a natural pairing for its exchange and clearing businesses.

However, on 11 September the market was stunned when the owner of the Hong Kong stock exchange, HKEX, made a proposal to acquire LSE. The cash and shares deal was valued at £31.6bn, or 8,361p per share — but HKEX would require LSE to scrap its planned acquisition of Refinitiv.

The LSE board has rejected the HKEX offer, but this story isn’t over yet. I’d expect HKEX to increase its bid or admit defeat in October. With LSE shares trading at record highs, we could see some sharp movements up or down when further news emerges.

Heading to the US?

Plumbing and heating supplies business Ferguson (LSE: FERG) has already confirmed plans to spin out its UK business, Wolseley, into a new UK-listed company. Ferguson will be left as a pure US-focused company with a UK listing.

Some shareholders believe that makes no sense. They’d like to see Ferguson leave the FTSE 100 and move its stock market listing to the US, where it might attract a higher valuation. The appointment of a new US-based chief executive for the group has added to speculation that a change is likely.

If you’re a UK private investor holding the stock, I wouldn’t be too worried. Holding US stocks is easy enough in most big brokerage accounts. For investors who’d prefer to own UK stocks only, I would expect Ferguson to take steps to ensure an orderly market for UK sellers. In the absence of any concrete news, I would continue to hold Ferguson.

Will Lloyds surprise?

Of all the stocks due to report earnings in October, I suspect Lloyds Banking Group (LSE: LLOY) will be one of the most closely watched. The UK consumer-focused bank is due to report third-quarter earnings on 31 October, which is also expected to be Brexit day!

Although Lloyds’ headlines may be overshadowed by Brexit news, I expect City traders to be watching the bank’s numbers closely for signs of a slowdown in consumer spending or an increase in bad debt levels.

Lloyds’ large mortgage, credit card and loan businesses mean that it has a terrific insight into the financial health of UK consumers. The Lloyds share price has picked up in recent weeks but continues to trade close to book value, with a 6%+ dividend yield.

I believe the stock offers good value for long-term income buyers, even if the economy slows. But short-term reaction to bad news could provide an even better buying opportunity. Watch this space.

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.

Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group. 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

Investing Articles

After it crashed 25%, should I buy this former stock market darling in my Stocks and Shares ISA?

Harvey Jones has a big hole in his Stocks and Shares ISA that he is keen to fill. Should he…

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

How’s the dividend forecast looking for Legal & General shares in 2025 and beyond?

As a shareholder, I like to keep track of the potential dividend returns I could make from my Legal &…

Read more »

artificial intelligence investing algorithms
Investing Articles

Could buying this stock with a $7bn market cap be like investing in Nvidia in 2010?

Where might the next Nvidia-type stock be lurking in today's market? Our writer takes a look at one candidate with…

Read more »

Investing Articles

Is GSK a bargain now the share price is near 1,333p?

Biopharma company GSK looks like a decent stock to consider for the long term, so is today's lower share price…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

Could December be a great month to buy UK shares?

Christopher Ruane sees some possible reasons to look for shares to buy in December -- but he'll be using the…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

Sticking to FTSE shares, I’d still aim for a £1,000 monthly passive income like this!

By investing in blue-chip FTSE shares with proven business models, our writer hopes he can build sizeable passive income streams…

Read more »

Growth Shares

BT shares? I think there are much better UK stocks for the long term

Over the long term, many UK stocks have performed much better than BT. Here’s a look at two companies that…

Read more »

British Pennies on a Pound Note
Investing Articles

After a 540% rise, could this penny share keep going?

This penny share has seen mixed fortunes in recent years. Our writer looks ahead to some potentially exciting developments in…

Read more »