Victims of next FTSE reshuffle

Helal Miah, investment research analyst at The Share Centre, makes his predictions on possible movers in this week’s FTSE reshuffle.

Victims of next FTSE reshuffle

We rightly predicted back in August that precious metals producer Polymetal International would bounce back to the FTSE 100 after a number of years outside of the index. However, the performance of the shares over the last few months has been relatively poor given the drop off in the gold price which it is obviously very much dependant on, so it is highly likely that the company will fall victim to the next reshuffle.

Other candidates that are well positioned to fall off based on current prices include the UK’s leading supplier of building materials Travis Perkins and shopping centre investors Intu Properties.

The property sector as a whole has been hit hard since Brexit and Travis Perkins’ performance has not been helped by the knock on effect of weaker construction and overall sentiment. In the aftermath of the vote, we felt it prudent to advise investors to take a step back – at least until the picture becomes a little clearer.

Intu Properties has also seen its shares underperform in recent months due to concerns about the impact of Brexit and it has been hovering above the drop zone ever since. Interested investors will be aware that the consensus forecasts for earnings and dividend growth are similarly uninspiring.

Other companies that could be in the mix for relegation include Capita, Dixons Carphone and Hikma Pharmaceuticals.

New entrants

When it comes to possible new entrants it looks like Smurfit Kappa is in prime position to replace any company that falls out based on current prices. For those unfamiliar with the name, the group is one of the world’s leading producers of paper-based packaging and is clearly benefiting from the increase in people shopping online.

Another contender includes Scottish Mortgage Investment Trust. With 95% of its holdings weighing towards international investments, it’s possible that its recent success and subsequent rise to the top could be down to it benefiting from the weaker pound.

Auto Trader is also in a promising position to bounce upAuto Trader describes itself as the UK and Ireland’s largest digital automotive marketplace and so it is no wonder the group has performed well this year. A strong new car market also results in an active second hand car market and an increasing number of dealerships advertising on their platform. Visitors to the group’s digital platforms have risen by 36% over the year with mobile users clearly driving this growth.

Weir Group, Rentokil Initial and Just Eat are suspended just below the promotion zone so these companies could also be in the race and it will be worth keeping an eye on their prices over the next few days.

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