Welcome back to the Armchair Trader FTSE 350 monthly tip column, where I have been building a portfolio of shares selected from the 350 largest companies in the UK. The aim of the tip column is to show you that even in the UK’s blue-chip segment, there are still good gains to be made from actively managing your own shares – and the record so far speaks for itself.
We have had some strong gains, with CMC Markets [LON:CMCX] up 238% (position now closed), Volution Group [LON:FAN] up 41%, JD Sports Fashion [LON:JD.] up 24% and ME Group [LON:MEGP] up 17% since the positions were opened. Only one share, Entain [LON:ENT], has suffered double digit declines, a position that I subsequently sold.
For those of you who are new to my share tips, here are the principles that guide the investment decisions of my column,
Positive update from JD Sports Fashion
This week, we had some very positive news from JD Sports Group, which provided a trading update to the market. Sentiment has been overly negative for this best-in-class retailer, with the company suffering because of Nike’s poor performance results released earlier in the year. JD reiterated that it expects its own results to be in-line with forecasts and has commented on the ongoing strength of its US division. This is a good sign, as JD recently spent $1 billion on bolstering its presence state side through the acquisition of Hibbett, a retailer with 1100 stores. I think the 24% gain we have had here is just the start – with a current valuation of approximately 7x profit before tax, JD has further to go.
This month, the tip for the column pays specific attention to the developing macroeconomic situation, particularly the forecast reduction in interest rates and the resulting likelihood of a weaker dollar in the coming months. As you are probably aware, global interest rates have been much higher in 2023/4 than for much of the last decade, as roaring inflation in the post-covid era caused central banks to raise rates.
New opportunities as interest rates fall
With inflation now coming back under control and many central bankers hinting at lowering rates going forwards, this shift can create new opportunities within global markets. This dynamic has already been seen in gold markets, where gold has pushed up to record highs of $2300 per ounce, as investors position for lower rates.
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