Following recent stock market volatility, I’ve been looking for FTSE 100 shares to buy for my portfolio. I believe the companies outlined below offer both value and potential to buy into a high-quality growth story.
FTSE 100 mining group
The first company is mining group Rio Tinto (LSE: RIO). Shares in this organisation have been under recent pressure as the price of iron ore has declined. Rio is one of the world’s largest iron ore producers, and falling prices are almost certain to impact its profitability.
However, over the long term, I think RIO should benefit from global economic growth with its low operating costs and strong balance sheet. The earlier iron ore price boom has also enabled the group to reduce debt to almost nothing, giving it the capacity to increase shareholder returns.
These are the reasons why I rate the company as one of the best shares to buy. Although I’d buy the FTSE 100 stock, some investors might want to avoid the business as mining can be a polluting industry. Volatile commodity prices also make it difficult to predict what the future holds for resource groups.
Shares to buy for growth
Alongside Rio Tinto, I’d buy consumer goods champion Reckitt (LSE: RKT). Once again, shares in this company have fallen on hard times recently.
Earlier in the year, management warned that rising commodity costs would eat into its profit margins for 2021. Sales growth of core products, such as cleaning fluid, has also slowed as the pandemic’s receded.
These headwinds may continue to put some investors off the business. Nevertheless, I think now could be an excellent time to buy this company, which owns a stable of highly-regarded consumer brands, for the long run.
I believe the group has the balance sheet strength and competitive edge to push through these challenges. That’s why I would buy the stock as a defensive play for my FTSE 100 portfolio of high-quality equities.
The final company on my list is the luxury fashion retailer Burberry (LSE: BRBY). The demand for luxury goods has remained relatively steady over the past 24 months, despite the pandemic and the forced closure of retailers deemed ‘non-essential’. It seems consumers have been using their lockdown savings to spend on high-end products.
There’s no guarantee this trend will continue, but Burberry’s brand has continued to entice young, wealthy buyers around the world. As such, I think that as the economy returns the growth, the rising tide will lift the group’s sales, even if the lockdown savers move on.
That said, the group may face challenges such as rising commodity costs and higher labour costs. These could impact its profit margins and reduce growth if the company can’t pass the higher costs onto consumers.
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Rupert Hargreaves owns shares of Reckitt plc. The Motley Fool UK has recommended Burberry and Reckitt plc. 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.