Why I’d invest £1,000 in this cheap FTSE 100 growth stock now

This FTSE 100 growth stock looks cheap enough to be quite tempting for me to buy now.

| 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.

I like buying quality stocks when they are down. One of them is the relatively cheap FTSE 100 growth stock CRH (LSE: CRH). The Irish company, which provides products and services for construction, has seen its stock price decline by some 7% over the past year.

The number might not look particularly bad at any other time, but over the last year stock markets have risen a fair bit, which makes it stand out. Moreover, the stock was up some 5% yesterday, after the company released its latest trading update. If this had not happened, the fall would have looked a lot bigger. 

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!

CRH posts positive trading update

But things are clearly looking up for it. For the first quarter of 2021, the company said that sales and profits were “ahead”. It did offer some more details for sales numbers, though not for profits. Its reported sales rose by 15% from last year. It expects the numbers to stay ahead for the first half of the year as well.

This sounds pretty impressive to me considering that its sales showed an appreciable rise in the past year. It has not said anything about net profits, but if they rise too, that would be even better considering that they were at their highest in three years during 2021. 

A cheap FTSE 100 growth stock

From the looks of it, this might just happen. Analysts have pencilled in an increase in earnings per share for 2022. This also means the CRH share price could rise further. The company’s price-to-earnings (P/E) ratio based on its 2021 earnings, is already at less than 10x, making it a cheap FTSE 100 growth stock. Its forward P/E is even lower at around 9x, which suggests that the stock might just be a good buy for me. 

This is especially so when compared to its FTSE 100 peer Ashtead, which has a P/E of around 22x right now. Also, the FTSE 100 average P/E is at around 15x. So whichever way I look at it, the stock looks cheap in terms of valuations. 

It is a stock to buy for the long term though. Over the last 10 years, it has more than doubled investors’ money. But in 2022 it has fallen quite a bit, making its five-year gains appear quite underwhelming. I would keep this in mind, because as a cyclical stock, there is always a chance that it can dip a lot, and fast. It has not recovered since the February dip in the stock markets, for instance. And considering that the IMF has just lowered global growth forecasts, it could definitely see a slowing down in the near future. 

What I’d do

On the whole, though, I like CRH enough to have bought it some time ago and I am holding for the long term. After its trading update, I am also planning to invest another £1,000 in it.  

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you'll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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

Lady researching stocks
Investing Articles

Here’s why I’m avoiding this dirt-cheap dividend penny stock!

A dirt-cheap, dividend-paying penny stock with a vast presence sounds good on the surface. This Fool isn't convinced, however.

Read more »

Asian Indian male white collar worker on wheelchair having video conference with his business partners
Investing Articles

These top income stocks look dirt cheap to me. I’d buy them now

I'm taking advantage of today's stock market weakness to load up on top value income stocks

Read more »

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

Excessive stock trading erodes long-term gains!

Are high trading fees eating away at your returns? Research suggests that excessive stock trading could be to blame.

Read more »

Young woman sat at laptop by a window
Investing Articles

Pearson shares are up 25% since the market correction! Should I buy now?

Why have Pearson shares rallied since the market correction? This Fool looks at the educational provider in more detail and…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

Recession ready! I’d buy these FTSE 100 stocks for tough times

Jon Smith explains some of his favourite options for defensive FTSE 100 stocks that he's thinking of adding to his…

Read more »

A graph made of neon tubes in a room
Investing Articles

Down 45%, are these UK shares no-brainer bargains right now? 

Several top UK shares are down significantly and two companies on my list look like possible attractive buys right now.…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

I bought these 2 FTSE 100 shares two years ago. Should I now add to them?

Andrew Woods asks if he should add to his current holding in these two FTSE 100 shares ahead of a…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Has the Deliveroo share price bottomed?

The Deliveroo share price (LON:ROO) is down nearly 60% in 2022. Paul Summers asks whether it's now hit bargain territory.

Read more »