My top 5 FTSE 100 shares to buy

Rupert Hargreaves explains why he thinks these are some of the best FTSE 100 shares to buy considering other opportunities available.

| 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.

I think some of the best shares to buy on the London market are located in the FTSE 100. This blue-chip index has its share of duds, but most of its members aren’t and a handful of the firms are true global champions. 

With that in mind, here are my five favourite FTSE 100 stocks, four of which I currently own in my portfolio but would buy more of today. 

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

FTSE 100 beverage giant 

The first organisation on my list is the drinks giant Diageo (LSE: DGE). I like this company because it has a portfolio of internationally recognised alcohol brands, many of which fall into the premium segment. The premium nature of these products means the group can charge customers more, and we see this in its profit margins and return on invested capital. 

The group is also using its cash resources to buy up smaller brands and expand its footprint around the world. I think this combination of existing flagship brands and acquisitions can help support the company’s earnings and sales growth for years to come.

Some challenges the group might have to overcome going forward include alcohol bans, regulations, and higher costs, although it should pass these on to consumers through higher prices. 

Quality shares to buy

Another company in the FTSE 100 consumer goods sector that I own is the bleach-to-Durex producer Reckitt (LSE: RKT). This organisation experienced windfall growth last year thanks to the pandemic. Rising demand for cleaning products helped the firm’s Dettol brand clean up, although some other parts of the business suffered. 

As the pandemic has receded this year, demand for these products has declined, and Reckitt growth has slowed. Investors have been quick to turn their backs on the business as a result. 

However, I have been buying the shares because I am encouraged by management’s plans to invest more in growth. The new CEO has hiked the firm’s research and development budget and committed to reducing costs, which should help improve profit margins, giving the firm even more cash to spend on growth. 

This additional spending is one of the main reasons I believe Reckitt is one of the best shares to buy now. But like Diageo, the organisation is not immune to challenges. Rising commodity prices are pushing costs higher. This may offset some of the group’s cost savings and weigh on growth. 

FTSE 100 property champion

Moving away from consumer goods, I think British Land (LSE: BLND) is one of the best shares to buy now. I own this real estate investment trust (REIT) because it provides some diversification for my portfolio.

The company is one of the largest landlords in the country, owning a portfolio of commercial, industrial and office assets around the UK. Over the past few years, as the retail industry has struggled to fight off the e-commerce threat, British Land has been selling off some of its retail assets and reinvesting the proceeds in areas of the market where it believes there are more opportunities.

One of its most extensive development opportunities currently is Canada Water. The east London development is said to be one of the largest redevelopment schemes in the country, with thousands of homes and three million square feet of retail and office space. 

This development is set to be a huge growth opportunity for British Land and its investors. It is not the only reason I own the company (I am also attracted to the stock’s 3% dividend yield), but it is a major one. 

One challenge the group will likely face in the next year or so is higher interest rates. This headwind will increase the cost of the REIT’s debt and could impact property values.

Insurance giant 

One of my favourite stocks in the blue-chip index is insurance giant Admiral (LSE: ADM). Insurance can be a risky business. But Admiral really does know what it is doing. Over the past few decades, the company has grown from a start-up into one of the UK’s largest financial services groups. It is laser-focused on high-quality customer service and offering value for customers through deals such as multi-buy insurance policies.

Further, its decision to give customers refunds as there were fewer vehicles on the at the height of the pandemic last year has paid off. Customer numbers jumped in the first half of 2021. 

Going forward, the company will focus on its international divisions. That will help diversify the enterprise away from its home market. This growth potential is the main reason why I own the stock in my portfolio and think it is one of the best shares to buy in the FTSE 100. 

Of course, expanding overseas is not without risks. The company could end up going into a market it does not understand, which could lead to significant losses. 

Recovery investment

The final FTSE 100 company I want to highlight in this article is the catering organisation Compass (LSE: CPG). As the largest catering group globally, the business has a substantial competitive advantage over its peers. 

Catering is a low-margin, high-cost business, and economies of scale can help keep costs low. That is why Compass has been so successful in taking over the market. Economies of scale have helped the firm take over smaller peers, which boost the group’s bottom line, freeing up more capital for profit and so on. 

Unfortunately, despite the company’s advantages, it could not escape the pain the rest of the catering industry felt last year. It is now in recovery mode, and that is why I would buy the stock for my portfolio as a FTSE 100 recovery play. 

Some challenges it may have to overcome in the next few weeks and months include further coronavirus restrictions, rising costs and weak demand. 

Our 5 Top Shares for the New “Green Industrial Revolution"

It was released in November 2020, and make no mistake:

It’s happening.

The UK Government’s 10-point plan for a new “Green Industrial Revolution.”

PriceWaterhouse Coopers believes this trend will cost £400billion…

…That’s just here in Britain over the next 10 years.

Worldwide, the Green Industrial Revolution could be worth TRILLIONS.

It’s why I’m urging all investors to read this special presentation carefully, and learn how you can uncover the 5 companies that we believe are poised to profit from this gargantuan trend ahead!

Access this special "Green Industrial Revolution" presentation now

Rupert Hargreaves owns shares of Admiral Group, British Land Co, Diageo, and Reckitt plc. The Motley Fool UK has recommended Admiral Group, British Land Co, Compass Group, Diageo, 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.

More on Investing Articles

Smiling senior white man talking through telephone while using laptop at desk.
Investing Articles

5 ‘no-brainer’ income stocks to buy today!

Amid soaring inflation, I'm looking at these income stocks, offering big yields, to grow my portfolio.

Read more »

Trader on video call from his home office
Investing Articles

How I’d buy the dip in quality UK stocks with £750

Jon Smith explains the concept of buying the dip, and talks through the UK stocks he's going to buy at…

Read more »

Woman looking at a jar of pennies
Investing Articles

5 UK penny shares to buy with £5,000 today

It's hard to remember a time when there were as many tempting penny shares around as now. Here are five…

Read more »

man in shirt using computer and smiling while working in the office
Investing Articles

The Scottish Mortgage share price keeps falling. Should I buy?

The Scottish Mortgage share price has collapsed from its all-time high in little more than six months. Is it now…

Read more »

UK money in a Jar on a background
Investing Articles

Value investing isn’t dead! My top stocks to buy as inflation hits 9%

As value investing principles come back into fashion, Andrew Mackie looks at the current backdrop and shares what he's investing…

Read more »

Windmills for electric power production.
Investing Articles

Which FTSE 100 shares would I buy to offset higher fuel bills?

Rishi Sunak unveiled a windfall tax this week, hitting shares of energy firms, and especially oil & gas producers. But…

Read more »

Concentrated young african american black guy sitting on heated floor at modern coffee table in living room, looking at laptop screen
Investing Articles

Woodbois shares: should I buy the dip?

Woodbois Ltd (LON: WBI) shares have backtracked from their recent high. Partial to the odd penny stock, Paul Summers considers…

Read more »

Businessman looking at a red arrow crashing through the floor
Investing Articles

Is the stock market crashing?

Markets are proving pretty volatile at the moment so are we headed towards a stock market crash? Dylan Hood takes…

Read more »