- Darktrace and Vistry set to join the FTSE 100, according to indicative guidance from the index provider
- Ocado set to be booted out of the FTSE 100
- Mobico among candidates to be demoted from the FTSE 250
- Liontrust could regain its position in the FTSE 250 after a period in the doldrums
“There could be some significant changes to the main UK stock indices when FTSE Russell confirms the reshuffle of the FTSE 100 and FTSE 250 on 5 June. Ahead of this event, the index provider has announced indicative changes, based on data as of 24 May, and the final changes will be based on data as at market close on 4 June,” says Dan Coatsworth, investment analyst at AJ Bell.
“Ocado is no stranger to going in and out of the FTSE 100 and once again it looks set to move down a floor to the mid-cap FTSE 250 index. One of the most Marmite names on the UK stock market, investors either love or hate the quasi grocery/technology group and some even change their mind on a daily or weekly basis.
“There is always a ‘will it, won’t it’ element in trying to second guess what Ocado is doing strategically. On paper, the business model is focused on winning more grocery clients to power their online shopping warehouses, while also trying to improve the performance of a joint venture with Marks & Spencer. In reality, progress has been lumpier than gravy in a school canteen.
“Despite the share price bursting into life last week, Ocado always seems to struggle to sustain momentum and once again it is a prime candidate for demotion in the quarterly FTSE index reshuffle.
“One of the indicative changes to the FTSE indices could be short-lived. Darktrace looks set to join the FTSE 100 but it is in the process of being acquired by US private equity group Thoma Bravo so could disappear from the top tier fairly soon.
“Despite the housing market coughing and spluttering more than a person with a nasty cold, housebuilder Vistry looks poised to nab a spot in the FTSE 100. Trading has been good for the company, having guided a fortnight ago for half year and full year profit to be ahead of last year. Investors like what they’re hearing and the shares have steadily ticked up since last October with a 38% total return year-to-date. That makes Vistry the best performing housebuilder in the mid cap index and the 21st best performing FTSE 350 stock so far in 2024.
“Liontrust used to be a staple of the FTSE 250 but briefly disappeared after a run of bad luck for the share price when interest rates started to go up, a big acquisition didn’t work out, and it suffered widespread outflows from various funds. The asset manager has enjoyed enough of a recovery in its share price this year to put the stock in line for promotion back into the FTSE 250 index.
“While it continues to report net outflows, the company has kept its chin up and that positivity is starting to rub off on investors.
“Four years ago, the stock often traded on a premium rating above 20 times forward earnings. The valuation had crashed to a mere seven times forward earnings by the start of 2024, putting Liontrust in value territory. Bargain hunters’ ears pricked up and the stock has now started to re-rate.
“Formerly known as National Express, transport group Mobico has run out of fuel as far as inclusion in the main FTSE indices is concerned. The company is set to fall out of the FTSE 250 at the next reshuffle following a disastrous period which has seen the share price decline in value. Results for 2023 missed expectations and guidance for 2024 failed to impress. On top of this, cost pressures have crimped margins and lower profitability in Germany hurt earnings.”
Indicative changes to the FTSE 100 and FTSE 250 at the next reshuffle:
Source: FTSE Russell, LSEG, 28 May 2024.
