FTSE 100: the best shares to buy

Rupert Hargreaves explains why he’s buying these stocks that could be some of the best shares to buy now in the FTSE 100.

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Whenever I look at the FTSE 100, I scan the market for the best shares to buy. A handful of companies stand out to me right now as being incredibly well-positioned to ride the global economic recovery. 

With that in mind, here are three companies in three different sectors I’d buy in the FTSE 100 today. 

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Best shares to buy for growth

To start with, I’d buy luxury fashion house Burberry (LSE: BRBY). Over the past 12 months, the wealth of the world’s richest has ballooned. A knock-on effect of this trend has been a jump in demand for high-end goods. 

I believe Burberry could benefit from this theme as we advance. Green shoots are already appearing in the group’s trading figures.

In its latest trading update, the group reported a 1% increase in sales for the 13 weeks ended June compared to the first quarter of 2020. Full-price sales increased 26% compared to Q1. 

These numbers imply the company is on the road to recovery. That’s why I think this is one of the best shares to buy now. It also has one of the best Environmental, Social, and Corporate Governance (ESG) ratings in the blue-chip index

However, despite its size, the FTSE 100 company will face challenges. The biggest of these could be higher costs, which may reduce profit margins if management can’t pass them on to customers. This would put the brakes on growth. 

FTSE 100 leader

Moving away from the fashion sector, I’d also buy pest control group Rentokil (LSE: RTO) for my portfolio. I think this enterprise will benefit from two tailwinds in the future. The warming global climate is leading to a boom in pest breeding.

What’s more, reports suggest rodents have been quick to move into offices abandoned by humans during the pandemic. As workers return, the demand for Rentokil’s services may rise. 

I think these twin positives make the stock one of the best shares to buy now. Management has also been boosting organic growth with bolt-on acquisitions.

While these deals have boosted growth, there’ll always be a risk of the business overexpanding. This risk could lump the FTSE 100 firm with significant losses and unwanted debt related to a poor deal. 

Parcel demand

The final FTSE 100 company on my list is Smurfit Kappa (LSE: SKG). The paper-based packaging solutions producer is currently reaping the benefits from a booming e-commerce market.

Revenues increased 11% in the first half of this financial year, and the company continues to see “strong demand” for its core packaging products. Like Rentokil, Smurfit has also been buying up growth. It recently acquired a recycled containerboard mill in Italy and two businesses in South America to add to the fold. 

While the company is one of the largest packing producers in the world, this is a highly competitive market. As such, growth isn’t guaranteed. Profits are also highly dependent on commodity costs. An increase in commodity prices could push up costs, which Smurfit may not be able to pass on to customers. This could hit the firm’s bottom line and hold back growth. 

Despite these challenges, I’d buy the firm for my portfolio today. 

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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Burberry. 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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