Shares to buy: I think this FTSE 100 stock will be a winner in 2021

The FTSE 100 stock has struggled in 2020 so far. But the good news is that its key markets are recovering. It could turn around in 2021. 

| 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.

The pandemic hasn’t been overcome yet, but there is some good news. China, which was the first country to be hit by Covid-19, is well on its way to recovery. As a result, its economic prospects have improved. I think this is a good opportunity to consider buying FTSE stocks with exposure to the country. 

China’s recovery to support demand

In a recent report, Fitch Ratings, the global ratings agency, said that it had upped its China growth forecast for 2021 to 2.7% from 1.2% earlier. Even though this growth rate is way below China’s earlier 6%+ growth rate, this is only because of a sharp fall in GDP in 2020. In fact, according to Fitch, China’s GDP is already back to its pre-coronavirus levels. I think this bodes well for stocks like the FTSE 100 British luxury brand Burberry (LSE: BRBY), which has struggled because of the lockdown and the related sharp drop in demand. In its last trading update, the company reported that its revenue was down to almost half that in 2019. 

However, it also mentioned improvements in the Chinese market. Around 20% of its revenue is derived from China, and the number from Chinese shoppers is quite likely more because they also shop in places like Hong Kong. Asia Pacific, as a whole, accounts for over 40% of Burberry’s revenue. So even if the rest of the world shows muted demand, improved conditions in China alone can impact this FTSE 100 stock’s fortunes favourably. 

Should you invest £1,000 in Lloyds Banking Group Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group Plc made the list?

See the 6 stocks

Prospects for the FTSE 100 stock

This doesn’t in any way imply that BRBY will be back in the pink of health any time soon. Only that its prospects look better now. The company expects its full year, which ends in March 2021, to be underwhelming, and I think that’s no surprise. But, I also think that by this time next year, the outlook will have improved quite a bit. So if I have to start planning my investments for 2021 now as we near the end of 2020, BRBY is definitely on my list. 

Its share price trends are already encouraging, improving a great deal from the market meltdown driven weakness seen earlier in the year. I reckon the company’s next update could show improved performance, since economic conditions are on the mend. This should push the share price up even further. 

Alternative investment idea

Ted Baker is another FTSE stock I’d consider for its China exposure. The brand saw an astounding fall from grace last year resulting in its founder and CEO’s exit from the company. 2020 has dealt it another blow, like it has to almost all other companies. But its share price, too, is on the mend. It has a joint venture in China, with ambitious plans, and it may well turn out to be a good investment over time. I wouldn’t rush to buy the stock right now, but it is on my watch-list. 

But what does the head of The Motley Fool’s investing team think?

Should you invest £1,000 in Lloyds Banking Group Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group Plc made the list?

See the 6 stocks

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.

Manika Premsingh owns shares of Burberry. The Motley Fool UK has recommended Burberry. 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

Tesla building with tesla logo and two teslas in front
Investing Articles

Tesla stock is down. But it may be far from out!

Tesla stock has crashed this year but its long-term record of value creation is outstanding. So, could this be a…

Read more »

A young woman sitting on a couch looking at a book in a quiet library space.
Investing Articles

£3k in savings? That’s plenty to start buying shares and earning passive income!

Christopher Ruane explores how a stock market newcomer could start buying shares with a few thousand pounds and an appetite…

Read more »

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

5 passive income techniques of stock market millionaires

Christopher Ruane details a handful of approaches many successful stock market investors use to grow their passive income streams.

Read more »

Aston Martin DBX - rear pic of trunk
Investing Articles

Down 42% in a year, here’s why Aston Martin shares could keep falling

Aston Martin shares have destroyed vast amounts of shareholder value since the company listed in 2018. Are they now a…

Read more »

One English pound placed on a graph to represent an economic down turn
Investing Articles

FTSE shares: a once in a blue moon chance to get rich?

Christopher Ruane explains why he thinks hunting for blue-chip FTSE bargains in the current market could help an investor build…

Read more »

Businessman hand stacking money coins with virtual percentage icons
Investing Articles

4 stocks Fools have bought for growth and dividends

Sometimes, an investor doesn’t have to make the choice between buying a growth stock or dividend shares! Some investments offer…

Read more »

Rolls-Royce's Pearl 10X engine series
Investing Articles

Is there no limit to how high Rolls-Royce shares might go?

Christopher Ruane sees some reasons Rolls-Royce shares could continue pushing upwards. But is he persuaded enough about the potential value…

Read more »

Businessman hand flipping wooden block cube from 2024 to 2025 on coins
Investing Articles

How much could £20k in a Stocks and Shares ISA be worth in 2030?

UK investors have enjoyed spectacular returns in their Stocks and Shares ISA's over the past five years. Would could the…

Read more »