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So, the FTSE 100 finally broke through the long-anticipated 10,000 level on the first trading day of the new year. It’s a bit below it at the time of writing. But the top London index has gained 21% in the past 12 months.
The same again in 2026 could send the Footsie as high as 12,000 points. But what are the chances? The Footsie has risen 20% or more in a single year only three times this century — in 2005 and 2009. And we haven’t seen two consecutive bumper years like 2025.
History, it seems, is against another 20% year. But that doesn’t necessarily reflect the potential for individual FTSE 100 stocks — some of which still look undervalued to me.
Last year’s winners
In 2025, Rolls-Royce Holdings hit a lot of headlines with a 106% gain. And Babcock did better, with a 150% increase. Both are off to good starts in 2026, up another 7% in just the first few days. The Venezuela events seem to be keeping defence stocks going.
But it wasn’t the most successful sector. Fresnillo topped the FTSE 100, soaring 410% — boosted by silver prices. Endeavour Mining popped up 174%.
These sectors, I think, could count against a big FTSE 100 rise in 2026. We all hope to see more peace breaking out, and that could lead investors to cool a bit on defence. Slowing metals and minerals prices might mean softening in that industry too. I think investors should consider being cautious on both.
And this year’s?
Which FTSE 100 stocks can take up the slack this year? I suspect we might see a shift to value investing rather than growth in 2026. And on that score, I rate JD Sports Fashion (LSE: JD.) as a recovery candidate.
The company has had a tough few years, as economic hardship has cut into the spare cash that young people have to spend.
But that could be changing. For Q3, the company reported total sales up 8.1% — and up 15.7% in the first nine months.
Organic sales in the quarter did rise only 2.4%, mind. And CEO Régis Schultz spoke of “recent weak macro and consumer indicators“. But the company says it’s “on track to generate strong free cash flow and complete £200m of share buybacks in FY26“.
Sparkling forecasts
Forecasters see earnings per share growing 40% by 2028. A low dividend yield of 1.2%, however, might put investors off. But an average broker price target of 116p suggests a 40% rise — with the most bullish hoping for 200p.
Net debt of £3bn at FY time in February 2025 is a concern. Predictions have it down at £2bn by 2028, though it might still hold the stock back. Year-end results could be crucial, with a Q4 update due 21 January.
On valuation, I’d say a forecast price-to-earnings (P/E) ratio of 10, dropping to just 6.4 in two years, should provide a decent safety margin.
I doubt JD Sports will help the FTSE 100 reach 12,000 points in 2026. But I’m cautiously optimistic that 11,000 might not be out of reach.
