Image Alt

The Investing Box

  /  Editor's Pick   /  Could this FTSE 100 stock outperform in 2022?

Could this FTSE 100 stock outperform in 2022?

Screen of various price trends, possibly in FTSE 100

2021 might have been a year of growth in the FTSE 100 index, but it was not without its drama. Stocks rose and fell, and until very recently, it looked like stock markets may even crash because of the Omicron variant. With only a couple of trading sessions to go as I write, it seems quite unlikely now. In fact, even stocks that were struggling until very recently are now showing signs of pickup. In another article today, I talk about the International Consolidated Airlines Group in this context. Another one that is doing even better is the multi-commodity miner Anglo American (LSE: AAL).

Before I dive into the rest of its story, let me first just say that I bought the FTSE 100 stock a few months ago when it first started falling. It just looked like a really good stock to buy on the dip to me, and I maintain that view, even though it fell some more after that. At one point, it was down by more than 28% from its early August highs. It has recovered quite a bit since, though. In fact, at its last close at the time of writing, it is up by almost 24% from a year ago. 

Strong performance for Anglo American

I can see why. Its last results, which were released in July, were great. The company saw a huge spurt in both revenue and profits. Its outlook is positive too, with expectations of an even better next year than 2021. With its price-to-earnings (P/E) ratio still at a small 7.5 times compared the average FTSE 100 ratio of 18 times, it is clear to me that the stock price could rise significantly more from here. 

I’m doubly confident on this because it has a strong dividend yield. At 6%, the Anglo American yield is much higher than the 3.5% yield for the average FTSE 100 stock. It might not be as high as those for its Footsie peers like Evraz and Rio Tinto, which boast double-digit yields. But then they cannot say that their performance will be better next year than that in 2021 either. 

Risks to the FTSE 100 stock

There are, of course, still risks to the Anglo American share price. No one knows how next year will turn out. We might put the pandemic behind us, the recovery could happen and it would be a good times for commodity stocks once again. Or the pandemic will stick around, creating yet another year of tepid growth. And there might not be any government support to commodity producers this time around, either. 

What I’d do

On balance, though, I think there is a lot of upside to the FTSE 100 stock. I am now planning to increase my holdings, because I think there is a good chance that it could outperform next year. 

The post Could this FTSE 100 stock outperform in 2022? appeared first on The Motley Fool UK.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

More reading

Manika Premsingh owns shares in Anglo American, Evraz, International Consolidated Airlines Group and Rio Tinto. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.