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During the last year, the FTSE 100 The index has outperformed many other indices.
That outperformance of the FTSE 100 may well continue in today’s market. The UK stock market is sorely out of date. A combination of negative sentiment and outperformance may well mean that valuation has become too cheap for the FTSE 100.
CRH He has just announced that he wants to leave the London Stock Exchange and try your luck on the New York Stock Exchange.
If CRH obtains its primary listing on the US stock exchange, it will no longer be included in the FTSE 100 Index.
Much of CRH’s profits come from the United States. It is also the largest supplier of building materials in the United States. When the company announced its earnings and listing plans, the shares rose 10%. I think management probably expects CRH to trade at a higher valuation with a listing on the New York Stock Exchange.
ferguson it already changed its main listing to the US. flutter entertainment and WANdisco they have also announced that they are looking for a primary listing on the other side of the ocean.
Do US primary prices increase valuation?
It’s hard to say objectively whether changing the listing does anything good for stock price valuation. Only when between 10 and 20 companies have changed London for New York, can it be measured more sensibly.
However, if it turns out that valuations can be increased in this way, the management of FTSE 100 companies may have a fiduciary duty to investigate this with their shareholders.
One Footsie company for which this would also make a lot of sense is Ashtead Group (LSE:AHT).
Ashtead also has a lot of its earnings in the US. However, the company has just pledged its allegiance to London. However, a major listing for Ashtead in the United States could be a future catalyst for the stock.
Ashtead posted good third-quarter earnings and raised its guidance for the full year. The shares are trading at just 19 times earnings and have a modest dividend yield of just over 1%.
With only one quarter left in Ashtead’s accounting year, soon investors will start looking at next year’s price-earnings (P/E) ratio. Ashtead’s forward P/E is just 16. That valuation is becoming similar to the valuation of the FTSE 100.
What to buy this ISA season: FTSE 100 or Ashtead index?
Clearly the FTSE 100 is more diversified than a single stock like Ashtead. Therefore, the former is safer and also has a higher dividend yield. So more ‘jam today’ for the FTSE 100 index.
The growth, however, is much higher for Ashtead. The company has easily managed double-digit growth this year and in the past. If growth continues, Ashtead could offer more ‘jam tomorrow’.
So I will be adding to my position at Ashtead this ISA season. Its prospect of high growth at a reasonable price is simply too enticing to ignore…
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