Even though the weather is still fairly miserable, winter is almost behind us. In three months’ time we’ll be enjoying the late May bank holiday and hopefully looking forward to a long summer. Regarding my investments, the summer could also bode well for certain sectors and companies. With that in mind, I want to try and jump the gun and buy the FTSE 100 growth stocks that could do well this year.
More events, more revenue opportunities
The first company I’m considering is Flutter Entertainment (LSE:FLTR). The bookmaking company owns brands such as Paddy Power and Betfair. It also recently purchased the online bingo company Tombola. The share price is down 26% over one year.
In the Q3 results released in November, it said total revenue was up 9% year-on-year. Part of this was due to the increase in sports events that happened versus the restrictions of 2020. Looking ahead to this summer and beyond, I don’t see Covid-19 being enough of an issue to cause major events to be cancelled.
From that angle, I think that this FTSE 100 growth stock should see revenue rise as we see more sporting events this year. Further, given that the unemployment rate is now 4.1%, it’s almost back at pre-pandemic levels. If this economic data holds firm, then more people in the UK in employment should have disposable income to potentially look to spend with Flutter.
In terms of risks, the latest results showed that revenue growth mostly came from outside of the UK (the US and Australia). Therefore, to have falling revenue in the largest and most competitive market is something that is a worry to me going forward.
Growth stocks with strong results
The second business I’m looking at is Barclays (LSE:BARC). The share price has risen by 23% over the last year. As one of the largest banks globally, much of the performance depends on the state of the overall world economy. With 2021 results just out, it appears that the bank could do well this summer and beyond.
The 2021 report was impressive, with pre-tax profits soaring from £3.1bn in the previous year to £8.4bn last year. What I also noted was that the growth came from a variety of divisions, ranging from the investment bank to the consumer and wealth management arm. The benefit of this going forward is that earnings are diversified away from one specific group.
I think that the stock could see further gains this year. First, it was able to release £653m set aside for pandemic bad debt. I believe more could be released in coming quarters as the pandemic impact lessens. Second, higher interest rates should help the bank to be more profitable with a higher net interest margin. The Bank of England is forecast to raise rates twice over the summer months.
But I do need to be aware of the potential reputational damage to the bank that could be dug up from the ongoing investigation into former CEO Jes Staley. The ties with Jeffrey Epstein could go deeper than just the former CEO, so I need to be mindful of this.