The FTSE 100 has had a strong start to the year, up around 5%. And as such, I’m on the lookout for FTSE 100 stocks I can buy this month.
Investors had a tough time in 2022 as the Russia-Ukraine conflict alongside red-hot inflation saw global markets take a hit. Yet despite this, the index flexed its strength, posting a slight gain for the year. In contrast, the S&P 500 saw a 20% fall.
Much of the same is expected in 2023. However, with the FTSE 100 posting a strong start, I have my eye on two stocks that I think would be solid additions to my portfolio. Let’s take a closer look.
Scottish Mortgage Investment Trust
The first on my list is Scottish Mortgage Investment Trust (LSE: SMT). Last year was a bleak time for growth stocks as investors shied away from these riskier investments. As a result, the Scottish Mortgage share price nosedived by 40%.
The trust has also got off to a slow start year to date, with its stock slightly down. However, I like the look of the Baillie Gifford fund as a long-term buy.
To start, as a retail investor, what I most like about Scottish Mortgage is the exposure I gain under one investment. The trust invests in over 100 companies, including unlisted firms, meaning I diversify my portfolio through owning it.
Scottish Mortgage is also currently trading at around a 15% discount to a net asset value of 835p per share, which signals that the fund is undervalued. This suggest that I can access its top holdings such as ASML and Tesla cheaper than their market rate. Clearly, this is a positive.
Despite this, it’s weighting to China has seen it underperform recently as the country has struggled with its ongoing battle with Covid-19. And on top of this, with interest rates set to be hiked further, the trust could take a hit given its focus on growth stocks.
However, with a long-term focus, and with the diversification it offers my portfolio, I like the look of Scottish Mortgage.
Second on my list is retail giant Next (LSE: NXT). Unlike Scottish Mortgage, the stock has got off to a strong start in 2023, rising an impressive 15%.
One reason for this is that in January the business raised its pre-tax profit forecast by £20m to £860m. This was due to a rally in full-price sales in the nine weeks to the end of 2022.
The stock also looks cheap to me. It currently trades on a price-to-earnings ratio of 12. For a business of Next’s quality, I think this presents good value. Recently, it has also looked to expand, with its latest move being the acquisition of fashion company Joules.
The biggest threat for Next in the months ahead is rising costs and the potential for consumers to cut back on spending. However, as a strong brand with plenty of experience in the fashion retail industry, I’d be willing to snap up some Next shares.
I don’t have the spare cash to buy these FTSE 100 stocks in March, otherwise, I’d be keen. Should this change in the near future, I’ll be looking to pick up both.