3 FTSE 100 stocks to buy now

These FTSE 100 companies could be some of the best stocks to buy now as they profit from three trends, believes this Fool.

| 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.

A handful of FTSE 100 shares stand out to me as some of the best stocks to buy now. These companies are all in the materials sector, which I think will experience explosive growth over the next few years. There are a couple of reasons why I hold this view.

Booming industry 

First of all, as the global economy starts to rebuild after the pandemic, the demand for commodities such as iron ore and copper is exploding. For example, the price of iron ore recently jumped to an all-time high of more than $200 a tonne. And as the world continues to rebuild, I think demand for these commodities will remain elevated. 

Secondly, governments and companies will spend hundreds of billions of pounds developing renewable energy infrastructures over the next few years. This suggests the world will need more copper. Some analysts have forecast that its price will need to rise by more than 30% to justify the investment required to meet that higher demand. 

The third reason why I’d buy the three FTSE 100 stocks outlined below is that the materials industry is facing increasing pressure to improve its environmental footprint. Big firms have the edge here because they can afford to spend more to do so. Smaller companies can’t. 

FTSE 100 investments

Considering all of the above, I would buy Glencore (LSE: GLEN), Fresnillo (LSE: FRES) and BHP (LSE: BHP) today. 

All offer something different. Glenore is the world’s largest commodity trader, which means it has its finger on the pulse of the global commodity market. It’s also a large copper miner. So its trading operation provides some insulation against volatile commodity prices, which means the company has the edge over other mining groups. 

Meanwhile, Fresnillo holds one of the largest precious metals land reserves in Mexico. It specialises in gold and silver mining.

Many might not think of investing in precious metals to benefit from an economic recovery. However, rising demand from the manufacturing sector has helped power a near-75% increase in silver prices over the past 12 months. The company’s specialisation gives it an edge over other mining groups. 

Finally, BHP is the world’s largest diversified mining group. It produces iron ore, coal and copper. These are three industrial resources which are seeing rising demand due to economic growth. And, like the two organisations outlined above, the company also has a solid competitive advantage. That’s its size. 

Risks and challenges  

That said, while these companies do offer some attractive qualities, I’m well aware that the commodities market can be incredibly volatile. That’s why I’d buy all three FTSE 100 businesses in a portfolio. I think diversification could reduce volatility and the impact a sudden fall in the price of one commodity could have on the rest of the portfolio. 

I am also a bit wary of the environmental risks of owning these stocks. The mining industry has a terrible eco record, and while these companies are trying to change, change takes time. Therefore, they may not be suitable for all investors.

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 has no position in any of the shares mentioned. The Motley Fool UK has recommended Fresnillo. 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

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

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 »