With the UK’s top-tier index still struggling to find a sense of direction in 2023, it’s tempting to stay on the sidelines and not invest in any FTSE 100 stocks.
However, research frequently shows that it’s better to put money to work than to try timing the market.
With this in mind, here are three blue chips I’d buy today if I had the spare cash to do so.
Diageo
Premium spirit maker Diageo (LSE: DGE) has easily outperformed the FTSE 100 index over the last five years. Despite this, the share price has been trending down of late.
Perhaps investors are concerned about how the cost-of-living crisis and inflation are affecting business. Higher costs have certainly put pressure on many a company’s margins. The retirement of long-standing CEO Ivan Menezes could also be troubling some.
Personally, I wouldn’t be worried. While all company earnings suffer from a degree of cyclicality, Diageo’s are about as stable as you can get. Put simply, people will still drink, even in dark economic times. Indeed, it’s this predictability that has allowed the £75bn cap to keep hiking its dividends over the years.
A price-to-earnings (P/E) ratio of 21 is far from cheap but justifiable given Diageo’s enviable track record and bumper portfolio of brands.
Rio Tinto
Another FTSE 100 stock I’d snap up is mining behemoth Rio Tinto (LSE: RIO). Like Diageo, its share price has struggled in 2023. At least some of this is surely down to recessionary concerns and a drop in demand from key markets such as China.
On a more positive note, Rio stock currently yields 7.6%, so at least I would be getting paid to wait. And a P/E of eight, while not a screaming bargain within the industry, is still good relative to the market as a whole. Indeed, it could prove a steal if things don’t get as bad as some analysts and commentators are predicting.
It’s also worth remembering the longer-term reasons for investing here. Rio is likely to be a huge beneficiary over the next decade as a result of the green energy revolution and subsequent demand for copper in particular.
Rightmove
When thinking of quality stocks, property portal Rightmove (LSE: RMV) is often one of the first to spring to mind. This is a company that has long dominated its market and consistently posted sensational margins and returns on capital.
Notwithstanding this, even Rightmove has seen its share price struggle for gains in 2023. I suspect a good portion of this is due to concerns of just how far interest rates will climb this year and the impact this is having on mortgage availability and the housing market.
On the flip side, the beauty of Rightmove is that people will still be looking for accommodation — for rent or purchase — during tough times. The fact that estate agents will still need to list properties on the site, therefore, gives it a degree of protection that, say, housebuilders arguably don’t have.
To be clear, this FTSE 100 stock is unlikely to ever go on sale. However, the current P/E of 22 is far below the five-year average of 32.
