My shortlist of the best stocks to buy today includes a few FTSE 100 giants, and some lesser-known shares. They reflect my preference for value stocks and my long-term strategy to create wealth through compounding. I also favour bigger dividends as inflation soars.
However, I’m not against growth stocks. While I’ve had very few in my portfolio over the past year, they’re looking more attractive now.
In fact, I’ve recently added some stocks to my holdings after the tech sell-off saw their share prices collapse.
So, if I was investing £5,000 today, these are the stocks I’d buy.
Lloyds
Banking giant Lloyds trades in penny stock territory, although its £31bn+ market cap means it’s not really a penny stock. It’s offering an attractive 4.3% yield and looks cheap with a price-to-earnings ratio of just six.
I think Lloyds will do well due to higher interest rates, assuming they don’t dampen demand for mortgages. Higher rates mean bigger margins.
It’s also focused on property as 71% of its loans are mortgages. While there might be short-term pain if homebuyers are put off by higher rates, I’m confident about the housing market long term. I also like Lloyds’ plan to move into rental, buying 50,000 homes over the decade.
Legal & General
Legal & General is a giant in financial services and asset management. It currently offers a 7.2% dividend yield and trades with a P/E ratio of just 7.5. The firm only lifted its dividend in March, so it’s unlikely to be cut in the immediate future.
Boss Nigel Wilson has doubled the group’s profits and its dividend since 2013, but it remains unpopular with investors.
Higher rates and stagflation could hurt the business. However, despite the changing economic environment, I’d be happy to buy at today’s price.
Vistry Group
Shares in housebuilders haven’t done very well recently. This is largely due to higher interest rates, the cost of living crisis and a cladding pledge that will cost the industry billions.
However such firms, like Vistry Group, actually performed very well on the business front last year and 2022 has started well too. Vistry’s 2021 profits even exceeded pre-pandemic levels.
The firm recently said this year’s adjusted pre-tax profits will likely come in between £396.3m and £415m. That’s at the top end of analysts’ forecasts and above last year’s £346m.
Synthomer
Synthomer makes acrylic and vinyl emulsions polymers (latex gloves). Profits soared during the pandemic but the share price has fallen to near pre-pandemic levels. Despite this, demand for its products are likely to remain strong.
It also has a whopping 10% dividend yield.
A new boss and new business unit may cause some short-term teething problems, but I think it’s a good buy today.
Ceres Power
Ceres Power is an early-stage hydrogen technology business. At 626p a share, it’s trading around half of its peak. But I think this might be a good time for me to buy.
Ceres appears expensive as it’s valued on future profitability, but there’s plenty of potential in hydrogen. Fuel cells won’t only be used in cars. They can be used in everything from powering homes to supporting cloud data centres. The tech just isn’t quite there yet.
2022 could be a good year for Ceres as its partners ramp up production. I’d buy.
