Two FTSE 100 stocks that I think investors should be considering snapping up are Sage Group (LSE: SGE) and Barratt Developments (LSE: BDEV). Here’s why!
Sage Group
Sage is a leading provider of enterprise software, and the shares have been performing well for some time. I reckon they’ll continue this upward trajectory.
Over a 12-month period, the shares are up 57%, from 745p at this time last year, to current levels of 1,175p, as I write on Wednesday, 20 December.
Full-year results posted last month for the year ended 30 September 2023 were excellent, and showed me how well the business is doing despite macroeconomic volatility. Revenue and operating profit increased by 10% and 18% respectively. Plus, the business has an enviable track record of performance growth through acquisitions and organic measures, too. However, I do understand past performance is not a guarantee of the future.
Buying some shares would boost passive income with a dividend yield of 1.7% on offer too. It’s worth remembering dividends are never guaranteed.
From a risk perspective, Sage shares do look a bit pricey on a price-to-earnings ratio of 36. Any bad news could send the shares tumbling. However, I’m a firm believer that sometimes you must pay a pretty penny if you want to buy quality.
Finally, one aspect that I reckon will help Sage shares, and the business, to grow, is the firm’s decision to continue to incorporate artificial intelligence (AI) tools into its offering. This is a threat to the software company’s future prospects but it looks to be moving with the times already.
Barratt Developments
Barratt Developments is one of the largest house builders in the UK, and 2023 has been a bit of a damp squib for the firm. Higher interest rates and soaring costs have hampered the business. However, the longer-term picture is fruitful, if you ask me.
As I write, Barratt shares are trading for 558p. At this time last year, they were trading for 394p, which is a 41% increase over a 12-month period.
Current soaring costs, which could continue take a bite out of profit margins, are an ongoing risk I’ll keep an eye on. After all, profits underpin returns as well as growth aspirations.
However, looking forward, demand for housing is outstripping supply. Barratt can capitalise on this and boost performance and potential payouts. If interest rates start to come down and other volatility dissipates, this could be good news for the firm as completions and purchase numbers could rise.
At present, Barratt shares look excellent value for money on a price-to-earnings ratio of just eight. In addition to this, the passive income opportunity looks too attractive to ignore, if you ask me. A dividend yield of over 6% is much higher than the FTSE 100 average of 3.9% and looks well covered by earnings.
To summarize, although some short-term pain may be to come, I reckon Barratt shares could be a great longer-term buy and hold option for investors to consider.
