Analysts love these 2 FTSE 100 stocks. Should I buy them in February?

I’ve been looking at two FTSE 100 stocks that are widely admired by City analysts. I’d buy one of them, but I’m wary of the other.

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Global building materials company CRH (LSE: CRH) and telecoms giant Vodafone (LSE: VOD) are the two most popular FTSE 100 stocks among analysts, AJ Bell research shows. Should I listen to the pros and buy them in February?

All eight analysts who follow CRH named it a buy, the only stock on the entire FTSE 100 to get a 100% rating.

Analysts love these shares

This is a stock on the up, climbing 19.04% over the past three months, although the shares trade just 1.66% higher than a year ago. I’m surprised by its recent burst of speed, given the troubles afflicting the property sector. 

Management has defied the wider downturn, reporting resilient demand, strong pricing, and growing sales. Costs have been volatile, but CRH still expects to deliver full-year EBITDA earnings of $5.5bn, up from $5bn in 2021.

I am also impressed by its forecast dividend yield of 3.7%, which is notably higher than this year’s 2.7%. Better still, the payout is covered 2.7 times by earnings, which offers the prospects of further progression.

Management has also been rewarding shareholders through an ongoing buyback programme. This now totals a thumping $4.1bn since May 2018, further boosting returns.

CRH also has strong free cash conversion, forecast profit margins of 12%, and a solid 13.6% return on capital employed (ROCE). Its net debt is a concern, though. It stood at $9.98bn last June, although its $6.83bn cash reserve shrinks that to $3.16bn.

Given all the good news, I expected a towering valuation but the current price-to-earnings ratio is hardly demanding at 14. I agree with those eight City analysts. CRH looks like a buy to me.

I was surprised to see Vodafone was the second-most favoured stock among analysts. Of the 25 who took a view on the company, a staggering 23 said buy, with only two against (both of whom called it a hold).

High income, low expectations

I looked at Vodafone in December, and wasn’t hugely impressed. Its stock is down 26.7% in the last year, and 58.31% over five years. Today’s share price of 93.12 is a fraction of its March 2000 tech boom peak of 548.2p.

To make up for the lack of growth, Vodafone has lavished loyal shareholders with dividends. Today it yields a thumping 8.4%. That is one of the highest on the FTSE 100, although cover is wafer thin at just 1.2.

It’s cheap, unsurprisingly, trading at 9.7 times earnings. That may explain its appeal to City analysts. Some may be impressed that UAE telecoms company e&, formerly Etisalat, has upped its stake in Vodafone to 12%. I’m not. I never buy on takeover talk.

Personally, I remain wary. Vodafone is a sprawling beast that seems to be struggling across a number of markets. That sky-high yield doesn’t look safe to me, either. I suspect it will be cut again and I’ll take a fresh look afterwards. If I can scrape together the cash in February, I would rather buy CRH.

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.

Harvey Jones doesn't hold any of the shares mentioned in this article. The Motley Fool UK has recommended Vodafon. 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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