2 FTSE 100 stocks to consider buying this bank holiday weekend

The rain may be pouring but investors shouldn’t be snoring, as these top FTSE 100 stocks are worth taking a look at this bank holiday weekend.

| 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.

A young woman sitting on a couch looking at a book in a quiet library space.

Image source: Getty Images

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.

As a long-term investor, the weekend is always a great chance for me to turn off and ignore market noise. It is much easier than on some volatile weekdays when I’m tempted to check up on the FTSE 100 and my portfolio for movement. 

Luckily, with the long weekend on its way, I get an extra day to reflect on my portfolio without market movement distracting me. And this weekend, I’ll be deep-diving into these two companies to see if I should buy shares. 

Diageo

Diageo (LSE: DGE) has long been one of my favourite holdings — and it’s not just because it owns Guinness. The FTSE 100 share is a strong business that owns some of the most well-known brands on the planet. In the past 12 months, Diageo’s share price has risen more than 18%, from 2,860p to 3,390p today. 

There are a number of reasons why I would consider increasing my position in Diageo. As summer rolls in, I’m getting more bullish on Diageo’s position among reopening stocks. Having taken a hit last year as Covid-19 shut restaurants and bars, it has since shown remarkable resilience. Home consumption saw first-half 2021 sales increase 0.9%, including a 10% rise in the UK. This allowed Diageo to maintain a strong £1.58bn profit year-on-year. Now, with vaccinations rolling out and the economy reopening, the company expects operating profit growth to increase by at least 14% this year. 

My biggest worry when it comes to Diageo is its rising net debt, which sits at almost £15bn as of December 2020. Should interest rates rise, it could cause the company a headache and reduce its ability to return shareholder value. 

Despite this, Diageo remains one of the strongest brands in the world. As life returns to normal and people look to have a good time, I’m thinking that there’s still a lot of potential for its share price. 

Vodafone 

I’m moving away from alcohol and over to telecommunications for my next stock pick. Vodafone Group (LSE: VOD) has been on my portfolio shortlist for years, but I’ve never taken the plunge. Despite being a top FTSE 100 income stock, I always felt it was too expensive for me. 

The leading British telecom giant has seen its share price remain flat in the past 12 months — albeit with some dips and surges in between. At 129p a year ago, now sitting at roughly 128p, there has been little to write home about. 

However, Vodafone’s share price fell 10% last week thanks to investor skittishness following its quarterly earnings report. I, for one, actually found the company’s plans quite exciting. CEO Nick Read outlined the company’s plan to invest heavily in its network amid the 5G boom. Despite this resulting in short-term cash burn, I am excited that the company is so open about self-investment. Covid-19 has accelerated global digitisation greatly, meaning demand for the pipes that run the broadband system will grow enormously. 

But that doesn’t eliminate the business’s already massive debt pile, which sat at nearly £40bn at the tail end of 2020. This will only be made more worrisome by the company’s 2.6% revenue deficit in 2020. 

However, its forward-thinking plans have got me excited, while Vodafone’s recent price drop makes it a more enticing investment opportunity for me.

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.

Jamie Adams owns shares in Diageo. The Motley Fool UK has recommended Diageo. 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

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

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 »