January has been pretty kind to UK investors. Since markets can often turn on a dime however, here are three FTSE 100 shares I’ll be keeping a close eye on next month.
Shell
UK-listed companies don’t come much bigger than oil major Shell (LSE: SHEL). In fact, the company’s value has jumped over 20% in the last 12 months, largely as a result of the Russia/Ukraine conflict.
I’ll be interested to see whether full-year results on 2 February move the stock even higher. My inkling is that momentum may begin to slow.
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That might sound odd given that analysts expect net profit for 2022 to be almost double that achieved in 2021. Relative to the whole market, the shares still look cheap too (6 times forecast earnings).
But as good as it’s been over the last year, there are things that make me uncomfortable. Holders must always contend with the infamously volatile price of oil. And even when things are going well, firms in this sector can be forced to pay higher taxes on profits (and will in 2023). Oh, and adapting its business to the clean energy revolution will take time and money.
Sure, the 3.9% yield and share buybacks are attractive. As a stock for long-term capital growth however, Shell doesn’t make my shortlist.
Unilever
Another top-tier member I’ll be paying attention to is consumer goods giant Unilever (LSE: ULVR).
Thanks to its portfolio of brands that people habitually buy, this company has long been adept at riding out periods of economic strife better than most.
Nevertheless, I’m wary that many shoppers have been shifting to cheaper alternatives in 2023. We’ll find out how this has impacted Unilever when it releases its results for 2022 and comments on its outlook on 9 February.
I suspect this is why the shares have been fairly flat in 2023 to date. The still-not-cheap price-to-earnings (P/E) of 18 may also be a factor.
Then again, Unilever shares could do well this year if the slowdown isn’t as bad as initially thought. Regardless, returns over the decades have been excellent. And that’s what matters to me.
If I had the spare cash, I’d be comfortable buying the stock prior to results day.
Centrica
A final FTSE 100 share I’ll be watching next month is British Gas owner Centrica (LSE: SSE).
Like Shell, the company enjoyed a stellar 2023, thanks to rising prices. Go further back and Centrica’s value is up roughly 200% since the first UK lockdown in March 2020.
But let’s put things in context. Centrica was an absolute dog prior to the pandemic. Indeed, the stock is still down by almost 30% in the last five years. Ouch!
Still, the £5.8bn-cap is proof that I can make great profits if I’m brave enough to buy and hold out-of-favour stocks and my timing is (fortuitously) good.
The company is also a lot leaner and cash-rich than it used to be. The latter could mean a boost to the dividend, which could drive the share price even higher next month in turn. Full-year numbers are due on 16 February.
Then again, I also expect some profit-taking at some point. A larger-than-expected fall in inflation could be one catalyst.
As such, I wouldn’t be a buyer now.
