2 FTSE 100 shares I’m buying for a market recovery

Andrew Woods explains how adding FTSE 100 shares to his portfolio is part of his plan to respond to a market recovery.

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The FTSE 100 is full of exciting and interesting companies that may offer long-term growth. I’ve trawled through the index to find stocks I can invest in as the market recovers. Let’s take a closer look.

High revenue expectations

First, Experian (LSE:EXPN) reiterated its full-year guidance in a report for the three months to 30 June. At the time of writing, the shares are trading at 2,770p. 

In the same results, the credit reporting firm stated that revenue grew by 7%, with full-year revenue expected to rise by between 7% and 9%.

The business has been benefiting in the last couple of years from a very active property market.

However, Citi downgraded the company in August to ‘neutral’. It provided a couple of reasons for this move, including a decline in housing transaction volumes. In July, for instance, housing transactions fell by 20% year on year.

While this may be worrying in the short term, it’s probable that the housing market will pick up again at some point soon.

What’s more, the business has enjoyed attractive earnings growth over the past five years. For the years ended March, between 2018 and 2022, earnings per share (EPS) rose from ¢94.4 to ¢124.5. This means that the firm has a compound annual EPS growth rate of 5.7%. I consider this consistent and appealing. 

11.88% yield!

Second, Rio Tinto (LSE:RIO) may offer both growth and income to me. It’s widely known to boast one of the highest dividend payments on the market, paying $10.40 per share in 2021. This equates to a dividend yield of around 11.88%.

Last year, the mining firm benefited from elevated commodity prices. Between 2020 and 2021, for instance, pre-tax profit grew from $15.3bn to $30.8bn. 

Recently, however, a market slowdown and possible recession has led to deteriorating results.  

Despite this, demand for base metals, particularly copper, is set to increase in the coming years. That’s because these components are critical for environmentally-friendly products, like electric cars. 

As such, I think there’s a strong possibility that commodity prices will rise in future. This could be good news for Rio Tinto.

The business has been making strong efforts to expand in the copper market, making a $2.7bn bid for Mongolian copper mine owner Turquoise Hill Resources

This bid was unsuccessful, but Rio Tinto acquired the company after increasing its offer to $3.3bn. This may allow the business to engage in further copper exploration, thus supporting long-term production plans.

Overall, both of these firms undeniably face challenges in the short term. With investing, however, I prefer to look beyond the end of my nose. The possibilities for growth and income in these expanding businesses is too great to ignore, especially if and when the market rebounds. I’ll be adding shares of both companies to my portfolio 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 no position in any of the shares mentioned. The Motley Fool UK has recommended Experian. 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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