£10k of savings? I’d buy these FTSE 100 shares to grow my money

The FTSE 100 contains several high-quality growth shares. Our writer considers two of the best opportunities that might have a reason to soar.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

In recent years, the FTSE 100 has underperformed the major US stock indices. That can largely be down to the types of companies in each index.

For instance, the S&P 500 has benefited from its large weighting towards the tech giants. Whereas the Footsie includes more banks and energy companies.

Over the past year, the FTSE 100 gained just 1%. By contrast, the S&P 500 managed a solid 29%.

A stock-picker’s market

For investors in UK shares, it’s firmly been a stock-pickers market. Those that bought shares in Rolls-Royce a year ago more than tripled their money.

In addition, Sage Group and Marks & Spencer both gained around 60%. So there have certainly been opportunities.

But how might I find potential winners for the coming year? Many of the best performing shares start moving for a reason. This could be a surprising earnings announcement, an incoming CEO that could turnaround a business, or a new product that could boost sales.

So I’d be on the lookout for recent announcements.

Going places

One such FTSE 100 share I found recently is InterContinental Hotels Group (LSE:IHG). The Holiday Inn owner reported an annual jump in profits by 87% to over $1bn in 2023, from $540m the prior year. This was attributed to strong travel demand in all markets.

The largest jump in sales was in China, which saw revenue jump by 85%. Although many countries experienced earlier post-pandemic recoveries in travel, some are still recovering.

This bodes well for quality global travel businesses like InterContinental Hotels.

The company also raised its dividend by 10% from a year ago, and it launched a new $800m share buyback programme. Both measures are popular with investors as they enhance shareholder returns.

The business seems to be making excellent progress and has the potential to grow. It opened 275 hotels in 2023 and signed off 556 into its pipeline. And as it focuses on franchising rather than owning its hotels, it can benefits from strong margins.

Its 40% return on capital employed and 23% profit margin is exactly the kind of numbers I look for in high-quality businesses.

Bear in mind that it’s a cyclical business and any slowdown in economic growth could hamper its plans. It could also do with strengthening its balance sheet.

That said, overall, it’s a top quality FTSE 100 business. If I had spare cash, I’d add it to my Stocks and Shares ISA today.

Engines have started

Despite strong gains already, another Footsie share I’d buy is Rolls-Royce. Buying winners can often work out. It’s part-way through a transformation programme that started last year with the arrival of new CEO Tufan Erginbilgic.

Cost efficiencies, strategic initiatives and business optimisation delivered record performance in 2023. I reckon 2024 could see more of the same.

There’s some execution risk and I don’t think its share price is likely to triple again. But overall, it could be a steady performer for my ISA.

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.

Harshil Patel has no position in any of the shares mentioned. The Motley Fool UK has recommended InterContinental Hotels Group Plc, Rolls-Royce Plc, and Sage Group Plc. 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.

More on Investing Articles

A pastel colored growing graph with rising rocket.
Investing Articles

Meta stock is up 17 days in a row! Time to buy this record-setter?

Our writer wonders whether now is the time for him to add Meta stock to his ISA portfolio after its…

Read more »

Man putting his card into an ATM machine while his son sits in a stroller beside him.
Investing Articles

4 good reasons why I’m avoiding cheap Lloyds shares like the plague!

Lloyds shares look dirt cheap based on earnings, dividends, AND asset values. But is the FTSE 100 bank a risk…

Read more »

Young brown woman delighted with what she sees on her screen
Investing Articles

31% revenue growth! This top growth stock just keeps powering on

Shopify (NYSE:SHOP) smashed it in the fourth quarter, wrapping up an outstanding 2024. But is this growth stock worth considering…

Read more »

Investing Articles

Down 23% in a year, is Frasers Group a FTSE 250 bargain?

Christopher Ruane explains why he is taking the Buffett approach by sticking to what he comfortably understands. That does not…

Read more »

The words "what's your plan for retirement" written on chalkboard on pavement somewhere in London
Investing Articles

How much would someone need to invest in the stock market to retire and live off passive income?

Christopher Ruane explains some approaches and potential pitfalls of putting money in the stock market to try and retire early…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Growth Shares

This little-known technology company is now the 6th-largest business in the FTSE 100

Over the last few years, this under-the-radar technology business has quietly become one of the largest companies in the FTSE…

Read more »

Investing Articles

Barratt Redrow shares spike 6% as profits forecasts hiked! Time to consider buying in?

Barratt shares are leading the FTSE 100 higher in midweek business. Is now the time to consider the housebuilder as…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing For Beginners

2 FTSE 250 stalwarts that could help if we enter a recession this summer

Jon Smith explains why a UK recession might be around the corner, but flags up a couple of FTSE 250…

Read more »