The FTSE 100 has stabilised following the wobble it experienced just under a fortnight ago. But investor appetite for UK shares hasn’t exactly roared back into life. Concerns over the Covid-19 crisis, and what this means for the British (and indeed world) economy remain high.
I don’t plan to stop buying FTSE 100 stocks though. There are plenty of blue-chip UK shares I think will provide big long-term returns regardless of any hiccups in the fight against Covid-19. In fact I’m lining up some top Footsie stocks to buy in August.
A high-risk FTSE 100 share
I’m still not convinced to buy shares in British Land Company (LSE: BLND) in August, however. The high street remains under extreme pressure due to lingering fears over infections and the rise of e-commerce. A British Retail Consortium study has shown that one in seven shops in Britain now lies vacant, a worrying statistic for retail space owners like British Land.
The FTSE 100 stock also faces an obvious threat from the rise of homeworking. People are beginning to return to offices at the moment, but I’m concerned that demand for office space could be in for a prolonged and painful drop due to changing worker expectations following the pandemic and companies seeking to cut day-to-day costs.
It’s clear that demand for physical retail and leisure space will always be around. And it’s possible that I could be overly worried about British Land’s long-term future. After all, the business signed deals to lease 183,000 square feet across its London campuses just in the three months to June. But for the time being, I’m not prepared to take the risk. And especially as the FTSE 100 company still has a mountain of debt on its balance sheet. Adjusted net debt clocked in at £3.9bn as of March.
A better stock to buy!
I think that BHP Group (LSE: BHP) is a better FTSE 100 stock to buy in August. This is because of its extensive copper mining operations (according to Statista the diversified digger is the fourth-biggest red metal producer on the planet).
I think the medium-to-long term outlook for copper prices is mightily bright. Rising awareness over the climate emergency, and with it increased use of electric vehicles and renewable energy, means that huge amounts of copper should be hovered up. Huge global infrastructure investment and rebounding consumer spending following the economic crash also bodes well for the likes of BHP.
Be aware, though, that BHP’s worsening relations with workers at its Escondida mine in Chile could harm earnings if it ends in strike action. Huge production problems, whether due to labour or other operational issues, is always a threat to companies like this. Having said that, I think BHP’s shares may still be too cheap to miss adding to my portfolio right now (today it trades on a forward price-to-earnings growth (PEG) ratio of 0.1).