Could these blue-chip businesses be among the best FTSE 100 stocks to buy right now?
Betting on Asia
I think getting exposure to emerging markets is a great idea for long-term investors like me. It’s why I count Unilever, Diageo and Prudential among some of my key holdings. In the same vein, I’m thinking of adding Standard Chartered (LSE: STAN) to my stocks portfolio.
Like Prudential, I’m expecting the blue-chip bank to benefit from soaring financial product demand. Rapid population expansion and a fast-growing middle class in StanChart’s Asian and African territories has supercharged banking industry expansion there.
The bank generates 70% of turnover from North and South Asia combined and operates in regional economic powerhouses including China, Hong Kong, South Korea and India.
I think Standard Chartered could have a lot to offer me in the years ahead. However, I’m keeping a close eye on news flow concerning China’s debt-laden real estate giants like Evergrande. A collapse of the country’s property market could have long and wide-ranging consequences for the bank.
Trouble at Tesco?
Some may believe that Tesco (LSE: TSCO) could be a safer buy than StanChart in the near term. Consumer spending on food is one of the most reliable economic staples. And Tesco still commands a princely position at the top of the grocery industry. That said, I worry about how competitive pressures here could significantly worsen as cash-strapped consumers increasingly shop around.
Today, Aldi announced that it attracted half a million more customers in December as it enjoyed its “best ever Christmas”. This year-on-year jump illustrates that a drive for value could be a big theme for 2022 and possibly beyond.
Tesco faces losing customers to the discounters like Aldi, Lidl and general low-cost retailers such as B&M and Poundland too. And it may have to slash product prices to stop its market share falling sharply.
With Tesco also facing increased supply chain costs, I won’t be buying the FTSE 100 grocer for my portfolio any time soon.
A FTSE 100 stock I’d rather buy
UK housebuilders are among the biggest fallers in Monday morning trading. The likes of Persimmon (LSE: PSN) have slumped as the UK government demanded that developers and property owners pay to fix the cladding crisis. It’s been estimated that the cost of dealing with potential fire defects could run into tens of billions of pounds.
As I write, Persimmon is actually the biggest faller on the FTSE 100 today. But from where I sit, I think the builder’s investment case remains highly attractive, despite today’s announcement. I say this as someone who owns Barratt and Taylor Wimpey shares.
I’m confident that homes demand should continue to outstrip supply for a long time to come. A mix of lower-than-usual interest rates, Help to Buy equity loans from government, and intense competition among mortgage lenders should keep demand for new-build properties bubbling nicely.
Thus, I’m expecting Persimmon and its peers to keep delivering plump profits for its shareholders as they did during the 2010s.
