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My top FTSE 100 stock to buy for 2022 and beyond

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When it comes to FTSE 100 investments, I would be happy to include many companies in the blue-chip index in my portfolio. 

However, I would be comfortable buying and owning only a couple of stocks for 2022 and beyond. 

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My top FTSE 100 stock

The top FTSE 100 stock I would be comfortable owning in 2022 and beyond is the distribution group Bunzl (LSE: BNZL)

There are a couple of reasons why I would buy this stock for my portfolio today. 

As the outlook for the global economy is highly uncertain, I want to own companies with predictable business models that also support competitive advantages. 

Distribution is a slow and steady business. It is also a trade where scale matters. Distribution profit margins tend to be razor-thin, which means even the slightest disruption or cost increase can significantly impact profitability. 

Thanks to its size, Bunzl supports industry-leading profit margins. This gives the company a certain level of protection against uncertainty and competitive advantage. 

It also means the FTSE 100 corporation has plenty of cash to invest in organic growth and for bolt-on acquisitions. Over the past few decades, the company has grown rapidly using a combination of these two strategies. It can buy up smaller businesses and then use its size and efficiencies to increase profit margins

The company supplies relatively straightforward but essential products used in the everyday operation of various businesses, such as first aid kits, PPE and plastic cutlery. 

Throughout the pandemic, the demand for these products has remained relatively robust. That is another reason why I want to own the stock. If the pandemic gets worse, Bunzl has already proven that its business model is relatively resilient. Of course, past performance should never be used to guide future potential, but I think the group has many attractive qualities for uncertain times. 

Attractive growth potential

Looking forward, it has plenty of growth potential, a solid competitive advantage, and offers a set of products buyers will continue to need even in uncertain times. I also think the firm has desirable dividend qualities

Unfortunately, the company is also exposed to some significant risks. Rising inflation could have a considerable impact on profit margins.

Higher interest rates may also increase the cost of debt for the group. The company often uses debt to fund acquisitions, and higher interest rates could reduce its ability to complete deals.

It may also face increasing competition from competitors that see an opportunity to expand in the market. Bunzl is a sector leader, but that does not guarantee the group’s continued success.

Even with these risks and challenges, I think the stock has an exciting destiny ahead of it, no matter what the future holds in 2022. I do not believe many other companies in the FTSE 100 offer such attractive growth potential. 

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