Experts tip FTSE to continue its upward trend in the new year

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The Independent Online

How did our experts do in 2010? Predicting the FTSE 100 is always a tough ask, but two of last year's roster got remarkably close.

The winner by 0.06 of a point was Old Mutual Securities' Simon Murphy whose prediction of 5,850 was less than 50 points off the end of year close of 5899.94, followed by Sanjay Vidyarthi, from Noble, nearly as close with 5,950. Interestingly they were the two most optimistic estimates. The professionals' share tips also did well: only HSBC was in negative territory, down by 3.5 per cent. The others (in reverse order) Centrica, Balfour Beatty, WPP, HomeServe, Hoden Joinery, RPC and Euromoney gained between 24 and 64 per cent.

David Buik, BGC Partners

BG Group (1296p): Virtually has a licence to print money. Also, new reserves are likely to be found, plus BG will always be at the top of most people's list of takeover targets!

FTSE prediction: 6,400

Robert Quinn, S&P Equity Research

BMW (€58.85): Operating leverage is very supportive of rapid margin expansion. We foresee a near 50 per cent increase in 2011, to 8 per cent. A strong domestic market in Germany has been buttressed by fast-growing Chinese exposure, while an impressive new product overhaul, brings better pricing power, further cost savings and leads the premium market recovery. BMW is also the premium leader in CO2 fuel efficiency.

FTSE prediction: 6,550

Peter Shore, Aegon Asset Management

BSkyB (736p): We have been in regular dialogue with the senior non-executive directors, as well as the company's advisors, regarding the bid (from News Corporation). Since the proposed takeover, Sky has delivered two strong sets of quarterly results which have led to earnings upgrades and provided support for a higher offer price. We expect that the eventual takeout price for Sky will be above 900p a share.

FTSE prediction: 6,650

Steve Clayton, Mirabaud Securities

Telecity (479.4p): As the internet becomes an ever-greater part of the fabric of all our lives, the quantity of data sitting on servers keeps rising. Telecity is a specialist Data Centre operator. It is a survivor of the first boom and has emerged as one of the largest independent web hosting companies. Major clients like Facebook rely on Telecity to keep their online operations running.

FTSE prediction: 5,900

Michael Starke, Edison

African Barrick Gold (611p): The largest gold producer listed in London, yet its £2.2bn enterprise value is less than half that of closest rival, Randgold Resources, which has an enterprise value of £4.8bn. African Barrick produced more than double the amount of gold produced by Randgold in the first nine months of 2010, while its costs were also 10 per cent lower. With solid management we believe it is only a matter of time before the market's faith in London's largest gold producer is restored.

FTSE 100 prediction: 6,400.

Jeremy Batsone-Carr, Charles Stanley

AstraZeneca (2922p): Not only are pharmaceutical stocks likely to be more in vogue in 2012, but if equity markets blaze higher over 2011 the shares may lag. Operationally, investors are already well aware of the company's looming off-patent cliff, Seroquel litigation and generic Lipitor threats, but trading off just 7.5x estimated 2011 earnings and offering an estimated free cash flow yield of 13.5 per cent, the risk of ownership is significantly offset by the tangible rewards. The dividend yield of 5.5 per cent is extremely supportive.

FTSE 100 prediction: 6,150

Sandy Jadeja, City Index

GlaxoSmithKline (1240p): Appears to be poised for a move to the upside. As long as the stock maintains a foothold of £11.00, the odds of seeing £16.00 are likely. Currently GSK has traded sideways, but it seems to have formed a classic triple bottom pattern at £9.50 and has risen from this support level to create a further higher low. Once momentum picks up the stock is likely to continue its trend higher.

FTSE 100 prediction: 6,117

Ben Ritchie, Aberdeen Asset Management

Rolls-Royce (623p): The company has expanded from its strong position in aero engines into higher margin servicing as well as supplying turbines into other industries. It now has an order book of £58.4bn which equates to over five years' sales. We expect margins to continue to expand as services grow and revenues to develop as demand for the company's products increases.

FTSE 100 prediction: 6,500

Luke's Top Five

Lucky Luke bets his bonus on retailers

His first year as a guest share tipster for The Independent was a successful one. While the FTSE 100 turned £5,000 into £5,449 in 2010, had you put £1,000 on each of Luke's five tips, your money would now be worth £5,630. He did what most of the City's highly paid fund managers fail to do year in year out: he beat the market.

Luke's star performer was Kier (up 41 per cent) while BHP Billiton also did well, gaining 32 per cent. Serco finished in positive territory, up 6 per cent, with only set-top box maker Pace and chocolatier Thorntons losing for the novice tipster.

This year Luke has turned his nose up at our tip of Morrisons, in favour of Tesco. He's unusual for a pre-schooler in rarely kicking up a fuss when taken to his local branch: it sells his CBeebies comic and he makes a better fist of using its infernal self-scanning machines than his parents do.

Staying on the retail theme, he has also picked Burberry, being a boy of refined (and expensive) tastes. Luke has also opted to double up with the miners this year, going for Antofagasta and Anglo American.

And finally, taking after his father, Luke couldn't resist a bit of a gamble, picking 4imprint as the final member of his five. With a name like that, it looks like a media company of some sort, but in fact it designs and distributes promotional products. So it ought to do well if companies lift their promotional and marketing budgets in the new year.