AJ Bell FTSE 100 forecast for the end of 2020: 8,000.
The 20 cheapest FTSE 100 stocks on a price / earnings basis – all have a P/E ratio of less than 10.
33 FTSE 100 firms are forecast to yield of over 5% in dividends next year.
Five stocks to consider for 2020:
- Cautious: Severn Trent
- Balanced: TI Fluid Systems
- Adventurous: IP Group
- Income: Imperial Brands
- One to avoid: Compass
“The FTSE 100 is barely any higher than three years ago and the pound is still way below where it was in summer 2016, so it is relatively easy for value-seeking contrarians to make a case for a UK stock market which has underperformed, feels unloved (judging by fund flow data) and looks potentially undervalued on the basis of earnings and yield. As such, the FTSE 100 may have a better chance of making it to 8,000 by the end of 2020 than many suspect,” said Russ Mould, AJ Bell investment director.
“Granted, the issue of Brexit must still be resolved and doubts continue to hover over the health of the global economy. However, were the UK to strike a trade deal with the EU, Washington and Beijing to settle their differences once and for all and governments around the world abandon austerity and launch looser fiscal policies then the world could look very different.
“Even if the FTSE 100 fails to challenge the 8,000 mark, investors may still be able to prosper through careful stock selection, as the index is packed with companies which either look cheap on an earnings basis, offer a fat dividend yield, or both.
“In total return, sterling terms, the FTSE 100 has underperformed again, relative to its global peers in 2019. It has done less well than the other developed market options, America, Western Europe and Japan and even lagged Eastern Europe, while it has managed to fare better than only the Africa/Middle East region, Asia and Latin America.