When it comes to adding high-quality companies to your portfolio, you can’t go wrong with FTSE 100 stocks.
The UK-leading index is full to the brim with blue-chip businesses offering stable growth as well as the opportunity to generate passive income.
There’s a host of stocks that I’m watching like a hawk. And I’m monitoring a specific few that I think could be smart additions to my portfolio in the weeks and months ahead.
Barclays
First on my watchlist is Barclays (LSE: BARC).
When it comes to value for money, I see Barclays as one of the best options out there currently. As I write, it trades on a price-to-earnings (P/E) ratio of just over 4. Moreover, it has a price-to-book ratio of around 0.3. To me, this signifies the stock is seriously undervalued by investors.
I also like Barclays’ dividend yield. Offering a yield of 5.2%, owning Barclays stock will help me hedge myself, to some degree, against inflation. In the months ahead, this passive income could come in handy.
We’ve seen the volatile nature of the financial sector this year. Barclays’ operations across the pond have also been shaky as some US banks continue to suffer. However, with global diversification, a low valuation, and a high yield, I like the look of this one.
Scottish Mortgage Investment Trust
Next up is Baillie Gifford’s Scottish Mortgage Investment Trust (LSE: SMT). The trust posted a magnificent performance in a pandemic-struck 2020. Since then, it has failed to carry on with that fine form.
However, I think now could be a smart time to snap up some shares. Right now, it’s trading at a 16% discount to its net asset value, meaning I can get exposure to quality companies including Amazon cheaper than its market rate.
Its focus on growth stocks has seen it suffer. And this could continue in the months ahead. Large weighting to China may also concern investors.
However, I think this weighting will pay dividends over the long run. With it also offering me diversification, I see the investment as a smart one.
Burberry
Last up is Burberry (LSE: BRBY). The business has struggled of late as demand for luxury products has slowed, especially in China.
However, despite a lull, I see a strong business. The Burberry brand is iconic. And with a P/E ratio of 13, I think it looks cheap. On top of that, in line with the FTSE 100 average, it also has a yield of around 3.5%.
The stock may continue to lag as economic conditions continue to pressure consumers into tightening their belts. And any further signs of a recession would no doubt harm the share price.
Yet despite slowing Chinese growth this year, I can’t see this lasting forever. And with the middle class set to grow in Asia, I think Burberry is well-positioned to capitalise.
Am I buying?
So, are these stocks too good to pass? And am I buying them?
In short, yes. With any spare cash I have left as we roll into next month, I’ll be looking to add all of these to my portfolio.
