Sell in May and go away? I’d buy 3 FTSE 100 shares instead

As a long-term investor, I see greater risks in trying to time the market than in a buy-and-hold strategy. Here are three FTSE 100 shares I’d buy in May.

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After the Easter weekend, investors begin to look towards a traditionally weaker period for the stock market. May, June and September are traditionally the months with the lowest returns for FTSE 100 shares historically. Nonetheless, I’ll continue searching for cheap stocks to buy before the summer, despite concerns about seasonality.

Let’s explore the FTSE 100 stocks I’d buy in my Stocks and Shares ISA next month.

Aviva

The Aviva (LSE: AV) share price trails the FTSE 100 index over five years. It’s down 15% compared to the Footsie’s 7% gain. However, with a price-to-earnings (P/E) ratio of 8.74 and a dividend yield over 5%, I find Aviva stock attractive from both a value investing and passive income perspective.

The life insurance and pensions provider is returning total capital of £4.75bn to shareholders in addition to the £1bn share buyback it completed last month. This should provide downside protection to Aviva’s share price.

As inflation surges, Aviva shares could face some headwinds. For instance, the macroeconomic environment may result in lower consumer demand for retail annuity deals.

Conversely, with over £400bn assets under management, the company’s well placed to take advantage of a hawkish monetary policy response. Rising central bank interest rates afford Aviva the opportunity to move funds into higher interest-generating investments.

For me, Aviva looks like a reasonably valued FTSE 100 share with solid finances. I’d buy.

GlaxoSmithKline

At nearly $117.5bn, GlaxoSmithKline (LSE: GSK) is a top five FTSE 100 share by market capitalisation. Last year was tumultuous for this pharmaceutical giant. Activist investor Elliott Management unsuccessfully tried to remove the company’s CEO Emma Walmsley due to concerns over her non-scientific background.

Tensions eased last week following GSK’s takeover of US cancer drug developer Sierra Oncology in a $1.9bn deal. Moreover, 2021 saw GSK grow its revenues for the seventh year in a row — up by 5%. The healthcare business forecasts a 12%-14% rise in operating profits this year.

The GSK share price reflects the company’s strong recent performance, soaring 31% over the past year. Shareholders also currently pocket a healthy 4.52% dividend yield.

GSK carries a P/E ratio of 20.33, which is considerably lower than some direct competitors, such as AstraZeneca. As a defensive investment, with lower susceptibility to seasonal and cyclical fluctuations, GSK is my FTSE 100 pharma pick for May.

Whitbread

Whitbread (LSE: WTB) manages a range of hotels, restaurants and leisure clubs in the UK and Germany. The hospitality firm’s share price is down 18% over the past year following substantial revenue declines during the pandemic.

However, brighter days lie ahead, in my view. There are no longer any testing or quarantine requirements for international arrivals to the UK. Additionally, the rising cost of living means staycations are an attractive option for British holidaymakers this summer.

The combined effect of these developments should benefit Whitbread, which owns the Premier Inn brand. Indeed, like-for-like accommodation sales in the UK were up 5.5% over pre-pandemic levels in the third quarter of Whitbread’s 2022 financial year, although a 33.3% decline in Germany brought the total gain down to 5.1%.

Should a return to pre-Covid normality continue in both countries, Whitbread’s budget hotels should do well. I’d buy this FTSE 100 share before a summer recovery.

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 assessed. Consider taking independent financial advice.

Charlie Carman does not own a position in any of the companies mentioned. The Motley Fool UK has recommended GlaxoSmithKline. 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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