Should I Invest In These 5 FTSE 100 Shares?

Can Barclays PLC (LON:BARC), Prudential plc (LON:PRU), Antofagasta plc (LON:ANTO), Reed Elsevier plc (LON:REL) and Land Securities Group plc (LON:LAND) deliver market-beating total returns?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

To me, capital growth and dividend income are equally important. Together, they provide the total return from any share investment and, as you might expect, my aim is to invest in companies that can beat the total return delivered by the wider market.

To put that aim into perspective, the FTSE 100 has provided investors with a total return of around 3% per annum since January 2008.

Quality and value

If my investments are to outperform, I need to back companies that score well on several quality indicators and buy at prices that offer decent value.

So this series aims to identify appealing FTSE 100 investment opportunities and during recent weeks I’ve looked at Barclays (LSE: BARC), Prudential (LSE: PRU), Antofagasta (LSE: ANTO), Reed Elsevier (LSE: REL) and Land Securities Group (LSE: LAND). This is how they scored on my total-return-potential indicators (each score in the table is out of a maximum of 5):

  Barclays Prudential Antofagasta Reed
Elsevier
Land
Securities
Dividend cover 3 4 5 4 5
Borrowings 2 4 5 3 4
Growth 2 2 5 4 4
Price to earnings 4 4 1 2 3
Outlook 4 4 3 3 4
Total (out of 25) 15 18 19 16 20

Banking

Barclays posted a 28% slide in earnings per share with its half-year results, compared to a year ago. The firm also revealed plans to tap investors for a net £5.8 billion via an underwritten Rights Issue, as one of several actions to conform to the Prudential Regulation Authority’s new 3% Leverage Ratio target, a figure that currently leaves the bank with a capital shortfall of £12.8 billion. Restructuring continues to gain depth, width and clarity for shareholders of Barclays, as the new funding arrangement piles on top of £1 billion of restructuring expenditure. I’m still keen on the shares, though!

Insurance

Prudential has high hopes for its Asian activities, a region where it reckons people have yet to mass-adopt insurance products as they have in western markets, despite the existence of a rapidly growing, increasingly urbanised, and affluent middle class. Last year the firm gained 32% of its profits from Asia, so fast growth there is an interesting proposition for shareholders. I’m optimistic about the firm’s total-return prospects from here and likely to buy the shares.

Mining

Copper delivered 82% of Antofagasta’s revenue last year. There was also 7% from gold, 5% from molybdenum and 1% from silver, with the remaining 5% from other activities. A recent steady-as-she-goes production report is encouraging, but what are commodity prices going to do? You have to take a view on that to make sense of an investment, I reckon. I’m neutral about the firm’s total-return prospects from here, so will continue to watch.

Specialist information publishing

With its recent interim-results report, Reed Elsevier displayed gentle upwards progress with a 2% increase in revenue and a 6% increase in underlying operating profit. The firm focuses on a professional information provision, with North America providing 51% of revenue last year, Europe, 23%, the UK, 16%, and the remainder from the rest of the world. I have the company on my watch list, which suits for the time being.

Commercial property

Commercial property Real Estate Investment Trust (REIT), Land Securities, recently reported solid progress on its letting activities as demand continues to increase. The firm runs a portfolio of offices, shops, shopping centres, hotels, leisure assets and retail warehouse properties. Around 53% of such office and retail properties are in London. By investing in property and improving it, the company aims to generate value by attracting customers on higher rents, which also helps to lift the valuation of the assets. The shares trade above the firm’s approximately 903p diluted net asset value per share figure, and I’m happy to watch.

What now?

Companies with seemingly impregnable, moat-like financial characteristics can be hard to come by, which is why I’m enthusiastic about a new Motley Fool report, prepared by our top analysts, that highlights five such shares. “5 Shares To Retire On”, presents five shares that deserve consideration by investors aiming to build wealth in the long run. For a limited period, the report is free. I recommend downloading your copy now by clicking here.

> Kevin does not own any of the shares mentioned.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Investing Articles

Investing Articles

2 mouthwatering FTSE growth stocks I’d buy and hold for 10 years

Growth stocks purchased today could be the gateway to many years of capital growth and returns. Here are two picks…

Read more »

Investing Articles

Can the IAG share price really be as dirt cheap as it looks?

While most shares have recovered since the Covid days, the IAG share price is staying stuck to rock bottom. Surely…

Read more »

Investing Articles

BAE Systems shares are flying! Have I missed the boat?

Sumayya Mansoor looks into whether or not BAE Systems shares are still a good buy for her portfolio after the…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

1 heavyweight FTSE 100 share I’d buy as London retakes its crown

Some Footsie firms are extremely large, but that doesn't mean they couldn't get even bigger. Here's one such FTSE 100…

Read more »

Investing Articles

I’d buy 5,127 National Grid shares to generate £250 of monthly passive income

With a dividend yield of 6.5%, Muhammad Cheema takes a look at how National Grid shares can generate a healthy…

Read more »

Investing Articles

The FTSE 100’s newest member looks like a no-brainer to me!

This Fool explains why she sees the newest member of the FTSE 100 as a great opportunity after its recent…

Read more »

Investing Articles

Empty Stocks and Shares ISA? Here’s how I’d start earning a second income from scratch

Like the thought of earning extra cash tax free? Our writer explains what he'd do to begin earning passive income…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

No savings at 25? I’d start by investing £3k in these 3 red-hot FTSE 100 shares

Harvey Jones thinks these three FTSE 100 stocks would be a great way to kickstart a portfolio of UK shares.…

Read more »