I think the best shares to buy today in the FTSE 100 are companies benefiting from significant economic tailwinds.
I think these organisations should be able to capitalise on these tailwinds and the general economic recovery following the pandemic in the years ahead, which could potentially provide windfall profits for investors.
With that in mind, here are my five top FTSE 100 shares to buy today. I would be happy to add all the companies to my portfolio.
Best shares to buy today in the FTSE 100
The UK’s leading blue-chip index is an eclectic mix of companies specialising in everything, from mining to technology. Some investors and analysts have been arguing that the index does not have much exposure to fast-growing 21st-century sectors such as technology. This will hold it back as we advance, they argue.
However, many of the FTSE 100’s constituents operate within a niche in their respective markets. And while the index as a whole might not represent the 21st-century economy, many of the members are leaders in their respective sectors.
In my opinion, two of its best shares to buy are Legal & General (LSE: LGEN) and Aviva (LSE: AV).
Competitive advantages
Legal is one of the country’s largest asset and pension managers, while Aviva is one of the country’s largest insurance groups. Thanks to their size, they have significant economies of scale, enabling them to outperform the competition.
They are also benefiting from significant economic tailwinds. Rising awareness of financial products is helping drive the growth of insurance and investment products. Further, these companies are using technology to advance their customer offering, reduce costs and improve efficiency.
That is not to say that they are entirely immune from outside challenges. They face competition from peers in the sector, notably large American players such as Vanguard. Rising costs may also impact profit margins if they have to increase wages paid to employees.
Despite these headwinds, I think both FTSE 100 stocks have tremendous potential over the next few years due to the tailwinds outlined above. At the time of writing, shares in Legal and Aviva also support dividend yields of 6.4% and 5.1% respectively.
Unique operation
The global defence market is possibly one of the most polarising industries. Many investors do not want exposure to the industry.
However, on the other hand, the sector benefits from long-term contracts agreed with deep-pocketed governments and a significant moat. It is impossible for any old company to start selling defence equipment. The industry is highly regulated and controlled.
That is why I would be happy to add shares in BAE Systems (LSE: BAE) to my portfolio. The company is the largest weapons manufacturer in the UK and has an order backlog stretching out over several years.
It spends billions of pounds every year developing new technology and is a highly trusted supplier for governments worldwide. I think it is unlikely the business will lose these competitive advantages anytime soon.
Its technology portfolio is also well-regarded around the world and highly protected.
International FTSE 100 champion
There are few other companies in the FTSE 100 that offer the same competitive advantages. That is why I think BAE is one of the best shares to buy now.
Still, I will keep in mind this is a highly regulated sector, and the corporation’s growth should not be taken for granted. If it falls out of favour with certain customers, it could lose a significant chunk of revenue over the next couple of years.
At the time of writing, the stock offers a dividend yield of 4.3%. The shares are also trading at a relatively affordable forward price-to-earnings (P/E) multiple of 12.4.
International recognition
Speaking of companies with a global footprint and substantial competitive advantages, I think Burberry (LSE: BRBY) is also one of the best shares to buy now in the FTSE 100.
The luxury fashion house is recognised worldwide and has a strong international footprint. Luxury buyers from Hong Kong to London and Los Angeles are happy to pay a premium to buy Burberry branded goods.
This kind of luxury exposure should help the enterprise in the current inflationary environment. Corporations with high-profit margins tend to fair better in periods of rising prices as they have more room to absorb higher costs. The company’s wealthy clientele are also unlikely to move away from the brand if prices rise.
That said, despite the group’s advantages, fashion is a tricky industry to operate within. If Burberry misses a beat with fashion trends, the establishment could suffer a significant drop-off in sales. This is one of the biggest risks the group is going to face.
Even after considering this challenge, I think the corporation is one of the best shares to buy now. The stock offers a 2.5% dividend yield and is trading at a forward P/E ratio of 21.
One of the best shares to buy now for economic growth
I believe one of the main economic trends that will play out over the next decade is the growth of the telecommunications and data markets. One of the ways to invest in this growth is through mobile operators and infrastructure owners, such as Airtel Africa (LSE: AAF).
Airtel provides a suite of telecommunications services to its customers across Africa. As this market booms, it is attracting billions of dollars in financing from institutions worldwide. This suggests competition will be the biggest challenge Airtel will face in the years ahead. The impact competition has on the company’s expansion is something I will be keeping a close eye on going forward.
Nevertheless, as demand for data and connectivity services booms in the region, City analysts expect the company to report annual earnings growth of 57% for the 2022 financial year, followed by an increase of nearly 20% for 2023.
Based on these growth projections, the stock is trading at a forward P/E multiple of 13. It also offers a dividend yield of 2.7%.
