2 FTSE 100 stocks I’d buy in December

The FTSE 100 has had a good run recently. However, Edward Sheldon believes there’s still plenty of value to be found within the index.

| 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.

The FTSE 100 has had a good run recently. Yet as we begin December, there is still plenty of value to be found within the index.  

Here, I’m going to highlight two FTSE 100 stocks that I believe look attractive right now. In my view, both of these stocks have the potential to provide investors with healthy gains over time. 

This FTSE 100 stock just got a boost from Boris

Defence giant BAE Systems (LSE: BA) is one FTSE 100 stock that I believe offers tremendous value at the moment. Earlier in the year, its shares were trading near 670p. Today however, they can be picked up for around 500p – more than 25% lower.

I think this share price fall is overdone. I say so because this year, BAE has held up well. In its half-year results, posted in late July, the company reported a 5% increase in revenue. Meanwhile, in November, the company said that demand for its capabilities remains high. Order intake expectations are ahead of its original pre-coronavirus planning for the year.

Looking ahead, I think BAE is well placed to continue growing. Recently, the UK government announced that it will spend an extra £16.5bn on defence in the next four years in order to modernise the UK’s armed forces. A chunk of this money, which is set to be spent on robots, autonomous systems, and cyber security, should find its way into BAE’s coffers. Turning to the US, BAE says that its portfolio remains well aligned to customer priorities and growth areas. It expects this to continue under a Joe Biden administration.

BAE Systems shares currently sport a forward-looking P/E ratio of just 10.3. The prospective yield on offer is about 4.7%. Given these attractive metrics, I see the stock as a buy.

A play on Nike and Adidas

Another FTSE 100 share I’d buy in December is JD Sports Fashion (LSE: JD). Pre-Covid-19, it was trading at 870p. However, today, the shares can be picked up for around 775p.

There are a few reasons I’m bullish on JD Sports. The first is that sales of athletic footwear globally are surging. Between now and 2025, the market is expected to grow at over 6% per year. This should provide tailwinds for JD.

The second is that sales of both athleisure clothing and loungewear are also booming. Over the next five years, the global athleisure market is predicted to grow at around 8% per year, driven by the increasing focus on health. Meanwhile, the global loungewear market is expected to grow by around 9% per year in the next few years, driven by the work-from-home trend. JD, which specialises in these styles of clothing, should benefit from this growth.

Its revenues and profits are expected to take a small hit this year due to Covid-19. However, business is expected to pick up next year. Currently, analysts expect sales to grow 12% next year and net profit to increase 58%.

JD Sports shares currently trade on a forward-looking P/E ratio of 20 using next year’s EPS forecast. I think that’s good value. I’d buy this FTSE 100 stock today.

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.

Edward Sheldon owns shares in BAE Systems and JD Sports Fashion. 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.

More on Investing Articles

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »