I’m investing £500 in these 2 FTSE 100 hidden gems!

Andrew Woods offers his thoughts on two lesser-known FTSE 100 companies, and why he’s investing £500 in them.

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The FTSE 100 is full of interesting and exciting companies. Some are instantly recognisable, and others aren’t as well-known. I’ve got £500 to use to buy stocks, and I think I’ve found two of the hidden gems of the index to add to my portfolio. Let’s take a closer look. 

A growing business

The first business I’m focusing on is asset manager Schroders (LSE:SDR). In the past three months, the shares are down 12.6% and are currently trading at 2,640p.

For the six months to 30 June, the firm’s assets under management (AuM) grew by 1% to £773bn. 

This is positive news, especially given that rival companies have reported dwindling AuM figures. Ashmore, for instance, saw its AuM decline heavily in the first half of 2022. 

Also, for the same period, Schroders reported that operating profit increased by 2%, although pre-tax profit fell by 16%. This is likely the result of inflation, which is beginning to eat into the firm’s balance sheet

While many companies are suffering from inflation-related problems at the moment, I’d like to see pre-tax profits rise in coming quarterly reports.

Investment bank Credit Suisse recently upgraded the business, stating that it was trading at a “deep discount” and boasts a diverse portfolio.

It’s also in a good state of financial health, with cash of $5.09bn dwarfing its total debt of $373.5m. This should ensure that it can weather any storms that come its way in the short term.

Room for improvement?

Second, Premier Inn owner Whitbread (LSE:WTB) has seen its share price fall 9.55% over the last three months. At the time of writing, the shares are trading at 2,532p.

The firm was battered by the pandemic, which forced its hotels and restaurants to close for many months at a time. For the year ended February 2021, the company slumped to a £1bn pre-tax loss.

Threats remain, however, in the form of cost inflation.

Despite this, for the three months to 31 March, the business stated that it was seeing a continued rebound in demand after the pandemic. 

UK accommodation sales surged over 200%, compared to the same period in 2021. Furthermore, they remained over 21% higher than 2019 levels. 

As a potential shareholder, it was promising to read that total group sales were over 286% greater than the same period in 2021. While the firm definitely isn’t out of the woods yet, it’s clear that a recovery is in progress.

Overall, both of these lesser-known companies appear to be running smoothly. While both have suffered in recent years, they look to be recovering at a swift pace. Investing in both also gives me the chance to diversify my own portfolio. As such, I’ll use my £500 to buy shares in the two businesses soon. 

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.

Andrew Woods has positions in Ashmore Group. The Motley Fool UK has recommended Schroders (Non-Voting). 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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