Got £1,000 to invest? I’d buy one of these FTSE 100 stocks, but avoid the other

This FTSE 100 (INDEXFTSE:UKX) company has the future wrapped up, thinks Harvey Jones.

| More on:

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.

It’s tough on the high street as shoppers shift online and Brexit erodes confidence. Some retailers have risen to the challenge – for example, clothing chain Next is making its virtual and bricks & mortar sales outlets work together. Sadly, the following stock has fallen short and looks set to drop out of the FTSE 100 in Tuesday’s reshuffle as a result.

Marks & Spencer Group

Online shopping isn’t the problem afflicting Marks & Spencer Group (LSE: MKS), its once mighty fashion arm lost its spark years ago. When I wander into its clothing departments, which I do occasionally out of professional curiosity, I find them way too drab for me – and I’m in my 50s now. 

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

M&S food stores remain a source of bustling wonder and delight, but they operate in a competitive market, just ask any of the big supermarkets. The £3.71bn group is making up lost ground in online retailing through its tie-up with Ocado, but this has come too late to save its FTSE 100 status.

Back in 2007, pre-tax profits topped £1bn, but by 2019 they’d almost halved to £581m. Profit after taxation has slumped from £506m in 2014 to £29.1m.

The widespread unease about the group’s upcoming demotion from the FTSE 100 blue-chip rollcall shows the grip Marks had on a nation where it was the cornerstone of every high street or shopping centre that took itself seriously. Stores close, the world moves on.

My heart yearns for management team Archie Norman and Steve Rowe to turn things round. But my head says leave them to it, because the Marks & Spencer share price has disappointed for far too long. It’s down a third measured over one year, more than a half measured over five.

Yes, it looks a bargain trading at a forward valuation of 9.5 times earnings. It also offers a juicy forecast yield of 6.1%, with cover of 1.7, but I’m still sceptical. Right now, plenty of other dividend growth stocks look to be better bargains.


The rise of e-commerce is a boon for global paper and packaging company Mondi (LSE: MNDI). However, you wouldn’t know by looking at its share price, which is down 28% over the last year, as the group battles macroeconomic worries, higher maintenance costs, and what it calls the “mixed” pricing outlook for 2019.

Mondi also has to operate in the teeth of a packaging backlash, as consumers intermittently worry about all those corrugated boxes encasing their shiny new online purchases. It’s responding by reducing material and energy consumption, although there’s only so much it can do.

The £7.75bn group delivers strong returns on capital with wide margins, and has increased its dividend in nine out of the last 10 years. The forecast yield is now a solid 4.5%, while cover of 2.2 gives hope of progression. A forecast valuation of 9.9 times earnings makes the Mondi share price look tempting, given the sector’s long-term growth potential.

It could be a bumpy journey, with earnings forecast to fall 7% this year and by 1% the year after. I’d buy it ahead of Marks & Spencer, though.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Harvey Jones has no position in any of the shares mentioned. 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.

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 considered, so you should consider taking independent financial advice.

More on Investing Articles

Playful senior couple in aprons dancing and smiling while preparing healthy dinner at home
Investing Articles

Best British dividend stocks for July

We asked our freelance writers to share the top income stocks they’d buy in July, which included Dividend Aristocrats and…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

How I’d apply the Warren Buffett method to buying shares

Learning from billionaire investor Warren Buffett, our writer explains his own approach to investing in shares for his portfolio.

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

This dividend share yields under 1% — but I’d still buy it

This dividend share has a low yield. So why would our writer consider adding it to his income portfolio?

Read more »

Young lady working from home office during coronavirus pandemic.
Investing Articles

Looking for a good share to buy? Here’s how I do it

Here are two approaches our writer uses when hunting for a good share to buy for his portfolio to aim…

Read more »

man in shirt using computer and smiling while working in the office
Investing Articles

One cheap FTSE 100 share I’d buy for a new bull market

This FTSE 100 share is unloved and starting to look seriously cheap, says Roland Head.

Read more »

Young brown woman delighted with what she sees on her screen
Investing Articles

How I’d invest £500 in UK shares in 2022

Investing a small amount of capital in UK shares can result in high commission costs. Zaven Boyrazian explains how to…

Read more »

Black woman using loudspeaker to be heard
Investing Articles

2 battered FTSE dividend stocks to buy in July!

I'm still searching the FTSE 100 for the best bargains to buy. I think these two big dividend shares are…

Read more »

Woman pulling baffled face
Investing Articles

Can I trust Lloyds’ 6.1% dividend yield?

The Lloyds' share price has sunk in 2022, causing the bank's dividend yield to leap. But can I really trust…

Read more »