3 high-potential FTSE 100 shares I’d buy

These FTSE 100 shares are financially strong and have good growth prospects. Manika Premsingh would like to buy them before it is too late.

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.

Continued stock market buoyancy is great for investors. Especially after last year’s crash, there is nothing like seeing the value of my investments rise consistently. But it is not just the value of my portfolio that is rising. Prices of FTSE 100 stocks I would like to buy are rising as well. As a result, I find myself often fretting that I did not buy at the right time.

But I am encouraged by the fact that there are still stocks out there with a lot of potential to rise. And by potential, I mean that their share price trends are not in line with their financial strength or prospects. Because of this, I think it is only a matter of time before they start rising. 

Here are three such FTSE 100 stocks.

#1. Associated British Foods: retail reopens

When retailers reopened in April, Primark owner Associated British Foods said that the stores’ opening had gone “fantastically well”. In my view this was an encouraging statement because the retail brand is ABF’s big revenue generator. Last year was a setback because Primark stores were closed and the brand does not sell online. 

Besides this, its other segments like grocery, agriculture, and ingredients did well. If they continue to perform and retail catches up too, it could be a good year ahead for ABF.

But its share price has gone nowhere in the last three months. Its increase over the past year has been muted at 16% too. 

#2. Tesco: online strength

Sales at Tesco have slowed down recently compared to the past year. But that was to be expected, because 2020 was an atypical year. Instead, if I consider its growth from 2019, it is quite strong. Also, its online sales have shown double-digit growth. With digital sales increasingly likely to be the future, Tesco is in a good place I believe.

However, its share price fell 3% on the update. In fact, it has been flat for a long time. I reckon that will change though, as the economy picks up pace and its own growth is sustained. 

#3. Lloyds Bank: macro concerns for the FTSE 100 bank

Banking stocks’ recovery has been held back partly because regulation has kept their dividend levels low and partly because the economy is not entirely back on its feet yet. This is evident in the Lloyds Bank share price. While its share price has pretty much doubled since the stock market rally started last November, it is still way below the levels at which it started in 2020. 

But I think that can change. Lloyds’ latest results are strong, thanks to the fact that provisions for bad loans have declined. They will also be allowed to pay higher dividends in the course of time. I reckon its share price will start rising then. 

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.

Manika Premsingh has no position in the shares mentioned. The Motley Fool UK has recommended Associated British Foods, Lloyds Banking Group, and Tesco. 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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