£2,000 to invest? I’d buy these 2 FTSE 100 shares for my ISA

I think these two shares have a reasonable chance of outperforming their index in the years ahead.

| 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.

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.

sdf

With £2,000 to invest, you could spread the money between two FTSE 100 shares. I think these consistent dividend-growing companies have a reasonable chance of out-performing their index in the years ahead.

Information-based analytics and decision tools

Relx (LSE: REL) provides information-based analytics and decision tools to markets around the world. I like the company because it has a long record of steady trading and growing financial figures. For example, over the past five years, revenue has ballooned around 37%, operating cash flow is almost 70% higher and normalised earnings per share have risen by more than 100%.

Meanwhile, shareholders have enjoyed the company’s success too, because the dividend and the share price have both risen around 75% over the period. And I think there is more to come from the firm in the years ahead.

In a trading update in October, the directors said they were “confident” the firm would achieve underlying growth in revenue and adjusted earnings per share for the full trading year in 2019. Meanwhile, with the share price close to 1,848p, the forward-looking earnings multiple for 2020 sits just below 19 and the anticipated dividend yield is around 2.7%.

Relx isn’t an obvious bargain, but it scores well against quality indicators and has a good trading record. I’d buy some of the shares for that growing dividend and with a long-term investment horizon in mind.

Inspection, testing and certification services

Intertek (LSE: ITRK) provides assurance, inspection, product testing and certification services internationally and has a network of more than 1,000 laboratories in around 100 countries. I like the firm because of its consistent record of trading. Indeed, over the past five years, revenue has risen around 43%, operating cash flow is more than 70% higher, and normalised earnings per share have shot up just over 77%.

Shareholders have done well over the period too, with the dividend rising a little over 117% higher and the share price rising by around 110%. I reckon there could be more to come for investors. In August in the half-year report, the company said it expected the full 2019 year to deliver good” organic revenue growth at constant currency rates in each of its three divisions of Products, Trade and Resources. The directors said they were “confident” about the growth prospects in the global Quality Assurance market.

But with the share price close to 5,292p, the valuation looks full. The forward-looking earnings multiple for 2020 sits just above 23 and the anticipated dividend yield is a little higher than two.

However, the quality indicators look robust and it’s rare to find decent growing firms at bargain-basement valuations in the FTSE 100. I’d handle this share by aiming to buy on dips and down-days with a long-term investment horizon in mind.

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.

Kevin Godbold has no position in any share mentioned. The Motley Fool UK has recommended Intertek and RELX. 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.

More on Investing Articles

Man hanging in the balance over a log at seaside in Scotland
Investing Articles

Start investing this summer with a spare £250? Here’s how!

Christopher Ruane explains how an investor with a few hundred pounds to spare and no prior experience could look to…

Read more »

Young female analyst working at her desk in the office
Investing Articles

Is Palantir stock the new Nvidia? Why UK investors should (or shouldn’t) care

Palantir stock’s the top performer on the S&P 500 this year. Should UK investors consider it amid a blistering AI-fuelled…

Read more »

Investing Articles

3 FTSE 100 shares I think look undervalued

The FTSE 100 may be hitting record highs but there are still bargains to be had on the index. I…

Read more »

Close-up image depicting a woman in her 70s taking British bank notes from her colourful leather wallet.
Investing Articles

£20,000 in savings? Here’s how to target £841 of passive income each month

Passive income plans don't need to be complicated. Our writer explains how someone could target a sizeable second income buying…

Read more »

Happy couple showing relief at news
Investing Articles

3 passive income strategies I like to try to double the State Pension with just £100 a month

Investing consistently, with diligence, and patience can lead to an impressive stock market income that puts the State Pension to…

Read more »

ISA Individual Savings Account
Investing Articles

£20,000 invested in a Stocks and Shares ISA 10 years ago could now be worth…

Stocks and Shares ISA investors have earned tremendous returns in the last decade, but just how much money has been…

Read more »

British coins and bank notes scattered on a surface
Investing Articles

An 11.5% yield?! Here’s the dividend forecast for a hot income stock

This steadily recovering income stock has the highest dividend yield in the FTSE 250, which looks like it’s here to…

Read more »

Dominos delivery man on skateboard holding pizza boxes
Investing Articles

At 10p, is this penny stock a screaming buy?

This penny stock's growing rapidly, is debt-free, and is about to almost double its store footprint! Could it be on…

Read more »