Picture supply: Vodafone Group plc
Initially of this yr, the tea leaves weren’t essentially optimistic for the FTSE 100 index of main British corporations.
The economic system was fragile, with restricted development prospects. Geopolitical dangers weighed on the financial outlook.
Quick-forward to now. The FTSE 100 is up by 18% for the reason that begin of the yr. Alongside the best way it has repeatedly set new all-time highs.
Can the nice instances hold rolling?
Glass half full – or half empty?
Funnily sufficient, the reply to that query is just like what it will have been 12 months in the past.
Globally, dangers together with geopolitical uncertainty stay. In the meantime, the UK economic system continues to look sluggish.
Nonetheless, that has not stopped the FTSE 100 powering forward over the previous yr.
Even after its rise, the index nonetheless sells on a decrease price-to-earnings ratio than main US inventory indexes.
So, it could possibly be that the FTSE 100 retains doing nicely. Then once more, given the broader financial context, it might be that the FTSE 100 begins to fall.
Right here’s my strategy
Both situation might make sense to me. However, like everybody else, I have no idea for sure what is going to occur subsequent.
That’s wonderful, as I’m not investing within the index (for instance, by shopping for shares in an index tracker).
As a substitute, I’m searching for what I see as attractively valued particular person shares inside the FTSE 100.
One share to contemplate
One FTSE 100 share I believe traders ought to contemplate in the mean time is telecoms big Vodafone (LSE: VOD).
Whereas the index’s 18% achieve up to now this yr is spectacular, Vodafone has finished twice as nicely with its 37% share worth rise for the reason that flip of the yr.
The corporate is well-known, because of its robust model and large buyer base throughout many European and African international locations.
However one factor not all traders have totally appreciated is the expansion alternative Vodafone has in Africa. That’s true of voice and information providers, however I believe one other fascinating space is cellular cash.
Each Vodafone and Airtel Africa have been going gangbusters of their cellular cash operations. Vodafone describes its personal M-PESA providing as “the world’s most successful money transfer service”.
Corporations like Clever might have their very own view on that, however what isn’t unsure is that Vodafone has a big cellular cash operation with important potential for future development.
Final month Vodafone introduced its first dividend enhance in seven years. The share presently yields 4.3% and nonetheless sells for pennies regardless of its robust efficiency up to now this yr.
One threat I see is rivals scaling up their cellular cash operations, maybe taking market share from Vodafone and hurting its profitability.
However with its massive buyer base, geographic diversification, and robust model, I see loads to love concerning the FTSE 100 firm.
