2 blue chip FTSE 100 shares to buy for the market recovery

With the FTSE 100 down 5.3% this year already, I am looking at some blue-chip stocks to bolster my portfolio before the recovery.

| 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.

Since January, we have witnessed a mini tech crash, inflation pressures, and the invasion of Ukraine. For investors, a volatile period like this can be stressful. But with the FTSE 100 down over 5% this year, I think it is a great time to finally invest in those premium blue-chip stocks that always seemed too expensive. Here are the two picks that I’d add to my portfolio in a heartbeat.

British industry leader

Blue-chip stocks are generally the biggest and most consistent and reputable companies listed on an index. These companies usually have a huge market share and a strong history of investor returns. And in the past decade, Diageo (LSE:DGE) has embodied this better than most FTSE 100 companies.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

The global alcohol giant owns huge names like Johnnie Walker and Guinness and has leveraged recent revenue to acquire huge local names across emerging alcohol markets. Sales have increased steadily year-on-year and the excess cash has been reused effectively. Diageo recently announced a £4.5bn share buyback to be completed by 2023.

Strong sales growth in China and India means the company now expects to add over 10mn loyal customers by 2030. Diageo also launched a US$75m carbon-neutral distillery project in China last year. I think this Asia push could allow the brand to sustain its current global dominance.

Diageo is currently trading at 3,432p, down 16% since the start of this year. Looking at the share price movement from the pandemic lows to the recent all-time high of 4,030p in December 2021, I think Diageo shows strong recovery potential.

Growing risk of regulation is the biggest concern for the alcohol sector right now. Health taxes could cripple the booming alcohol market which would affect its sales directly. Despite this concern, I think Diageo’s business plan and market share will help it retain its position as one of the most reliable FTSE 100 shares over the next decade as well. This is why I am planning on purchasing Diageo shares if it dips further.

Brand value

Consumer goods brand Unilever (LSE:ULVR) is the next blue-chip FTSE 100 share I’d buy right now. Much like Diageo, the UK giant owns a host of popular brands in its segment like Dove, Lipton, and Vaseline.

With growing inflationary pressures, I would like to add companies with pricing power, like Unilever, to my portfolio right now. If a company can pass on some of the excess costs to its consumer without losing a major chunk of sales, it almost ensures revenue growth even during turbulent periods. Unilever recently streamlined its operations and this move is expected to save about €600m over two years, which will fund its marketing and R&D wings. I think this will give it a long-term edge over smaller competitors who will struggle to offset revenue losses.

Going forward, the company expects 2022 sales growth to be between 4.5% and 6.5%. Given that this rate of growth is not earth-shattering, there is a risk of share price stagnation. Investors could opt to invest in more exciting sectors which would affect Unilever’s price action. The brand also faces stiff competition from the rise of generic alternatives and discount retailers. But being a well-established FTSE 100 consumer goods giant, I think Unilever is well placed to handle market volatility, which is why I think it is a prudent recovery play for my portfolio now.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo and Unilever. 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.

Should you invest the value of your investment may rise or fall and your Capital is at Risk. Before investing your individual circumstances should be considered, so you should consider taking independent financial advice.

More on Investing Articles

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

UK shares: 1 cheap dividend stock I bought to combat inflation!

This Fool is on the lookout for the best UK shares to protect himself from soaring inflation. Here is one…

Read more »

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

A beaten-down penny stock to buy on the dip!

This penny stock is down 12% in just a few weeks. But at the current price, it looks like a…

Read more »

Young brown woman delighted with what she sees on her screen
Investing Articles

Should I buy Marks and Spencer shares for its growth in July?

Despite posting excellent annual results, Marks and Spencer shares are down 40% this year. Could this be a buying opportunity…

Read more »

Stack of one pound coins falling over
Investing Articles

The Lloyds dividend could keep growing – but will it?

Our writer explains why he's not taking the prospect of a growing Lloyds dividend for granted.

Read more »

Shot of an young Indian businesswoman sitting alone in the office at night and using a digital tablet
Investing Articles

Are BT shares a good buy at 185p?

BT shares offer a fairly attractive dividend and are down considerably over four years. But is this stock right for…

Read more »

An airplane on a runway
Investing Articles

The Rolls-Royce share price is down one-third. Should I buy?

The Rolls-Royce share price has lost a third of its value since the year began. Our writer explains why he…

Read more »

Black woman using loudspeaker to be heard
Investing Articles

Down 57%, cheap NIO shares are ‘no-brainer’ additions to my portfolio!

NIO shares have risen considerably in recent months, but are down over the year. I'm still buying this stock for…

Read more »

Young woman with face mask using mobile phone and buying groceries in the supermarket during virus pandemic.
Investing Articles

Will a recession help or hurt the B&M share price?

The B&M share price has been tumbling and there's a recession looming, So why would our writer still consider adding…

Read more »