On average, 2020 was a disastrous year for investors. The FTSE 100 index ended the year much weaker than it started. But for savvy investors in UK shares, it was also a year to hit gold.
More than one FTSE 100 share’s price doubled during the year from the levels hit during the stock market crash. Some of these shares look pretty attractive to me as an investor.
But they also leave me asking how much further can these share prices go?
#1. Intermediate Capital Group: making good investments
The FTSE 100-listed asset manager Intermediate Capital Group (LSE: ICP) distinguished itself from the broader financial services set in more than one way last year.
It had climbed its way up to the FTSE 100 list of constituents when I first wrote about it. Further, in its last set of results for the half-year ending 30 September 2020, it reported a 32% rise in earnings per share. It also pays a dividend and has a yield of 3.1%, which isn’t bad in my view, especially considering the many dividend cancellations that happened in 2020.
Yet, there are downsides to ICP too. Its income has been inconsistent over the years. And its share price has run up a lot in the last year. This is especially so since its results were released soon after the November rally started, rewarding its performance more than would have been the case in more normal times.
According to Financial Times data, analysts on average expect a 5.7% increase in the ICP share price over the next 12 months. Like all forecasts, this could change based on future developments and is not something to rely on. But I think it’s a valuable piece of information to consider.
This combined with the over 200% increase in price since the worst of the crash, suggests to me that I should wait and watch for now. An investment in ICP could continue to reap rewards, but I would think the process would be slow.
#2. Glencore: commodity boom for this UK share
Like all other FTSE 100 miners, Glencore (LSE: GLEN) has benefited from the boom for industrial metals. In what could’ve been a time of crash and burn for miners, an upswing in Chinese demand saved the day. The vaccine discovery provided their share prices with further impetus.
By August, Glencore’s share price was already close to double the levels seen during the stock market crash. Now it’s close to three times those levels.
If the Chinese fiscal stimulus continues to create infrastructure and the US’s fiscal spending takes off too, I reckon that Glencore will find itself in a good place this year.
Which isn’t to say that it’s a firm without a flaw. Glencore reported weak financials for the first-half of calendar year 2020. It’s yet to report another set of numbers that could serve to wipe off that memory clean. It has other serious issues too, like corruption charges. The public reveal of these charges can be directly linked with its subsequent share price weakness.
On balance, though, I think given the changed global situation we find ourselves in, the Glencore share price can make gains.