3 FTSE 100 stocks I’d buy with £3,000

This Fool takes a look at three FTSE 100 stocks he’d buy for his portfolio, based on their valuation and growth prospects.

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I think there are some great bargains in the FTSE 100 right now. And with that in mind, here are three blue-chip stocks I’d buy with £3k today.

FTSE 100 stocks to buy

The first company on my list is mining giant Glencore (LSE: GLEN). In my opinion, this is one of the best corporations to own in the economic recovery.

As well as having a significant global mining operation, the company’s also the world’s largest commodity trader. This gives it a considerable advantage because it can produce and sell commodities directly to clients.

With the demand for essential commodities such as copper already outstripping supply, I reckon Glencore may see rapidly rising earnings as we advance. That’s why I’d buy this FTSE 100 company.

The primary risk facing the business today is that the economic recovery doesn’t live up to expectations. This could send commodity prices plunging, which would be bad news for the group and its prospects.

Market leader

I like to buy FTSE 100 companies with substantial competitive advantages. These can come in many different forms. For example, Royal Mail‘s (LSE: RMG) advantage is size.

The company’s been under pressure in recent years as smaller competitors have been able to pick and choose their markets in the UK. Meanwhile, Royal Mail must provide a postal service to the whole country.

This weakness became a strength last year. The company’s profits boomed, and so did its share price. Thanks to this rally, the stock has recently been promoted to the FTSE 100.

I think there’s a good chance Royal Mail’s growth will continue. That’s why I’d buy this stock today. By reinvesting pandemic profits back into the business to improve efficiency and profit margins, I think the enterprise may be able to steal a march on competitors.

That said, there’s no guarantee the company’s growth will continue. Competitors also saw demand for their services expand in the pandemic. So they could be looking to expand operations as well. This could hold back growth at Royal Mail.

Market expansion

The final FTSE 100 share I’d buy with an investment of £3,000 today is homebuilder Taylor Wimpey (LSE: TW). UK housebuilders can’t build properties fast enough. Demand is far outstripping supply, and it looks as if this will last for many years. Property prices are increasing rapidly as a result.

This is the perfect environment for Taylor. Demand is running red hot, and prices are also rising. As a result, the company is upping its output to meet higher demand. I think this could translate into rapidly increased profits and dividends.

Unfortunately, the group is also having to deal with higher costs. Rising prices are offsetting these higher costs, but if prices start to cool, the group’s profit margins could come under pressure. In addition, a jump in interest rates may also deflate the property market. That’s another significant risk facing the business.

Despite these risks and challenges, I’d buy the stock for my portfolio 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.

Rupert Hargreaves owns no share 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.

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