When trying to decide which FTSE 100 stocks are best to buy, I can’t help thinking of the saying, ‘One man’s trash is another man’s treasure’. In other words, personal choices are subjective.
Ascertaining which stocks are worth buying really depends on what I’d like to achieve personally. Am I looking for passive income stocks? Or, am I looking for growth stocks that could soar in the future? Alternatively, am I looking for blue-chip businesses and industry leaders? Some stocks may cover more than one category mentioned.
Let me break down some picks I’d love to buy when I next can!
Passive income seeker
Vodafone (LSE: VOD) shares offer a dividend yield of over 10% and the shares look cheap on a price-to-earnings ratio of just six. I am conscious that dividends aren’t guaranteed, of course.
As one of the largest telecoms businesses in the world, Vodafone is in prime position to benefit from 5G roll out. More crucially for me, growth opportunities in territories such as Africa offer the business the chance to boost its profile, performance, and investor rewards in the future.
The biggest risk for me is the mountain of debt Vodafone has to contend with. At some stage, paying down debt may take precedence over investor rewards.
Finally, recent Q3 results were mainly positive, as organic revenue grew by 4.7% compared to the same period last year. Plus, global services revenue grew by 8.8% and its B2B division grew by 5%.
Growth (and passive income) stock
The UK’s largest residential property developer, Barratt Developments (LSE: BDEV), could be set for tremendous growth in the future. This is because demand for homes is outstripping supply in the UK.
However, current economic volatility, including inflationary pressures and high interest rates have hurt the business. This is the primary risk I’ll keep an eye on, but I view it as a shorter-term issue. As a long-term investor, the outlook for me is bright.
From a fundamentals perspective, the shares trade on a P/E ratio of just five, making them attractive. Additionally, a dividend yield of just under 6% is enticing to help me build a second income stream.
I reckon the stock will soar once turbulence dissipates and interest rates and inflation levels drop.
Rising star?
B&M European Value (LSE: BME) is a newer member to the UK’s premier index after a brilliant few years, driven by acquisition-led and organic growth. The rise of discount retailers has been massive in recent years, driven by a tougher economic picture, and the recent cost-of-living crisis.
From a bearish view, could B&M’s bubble burst eventually? Or will its upward trajectory continue? One issue that could hurt it is its propensity for acquisitions. When they work out, like they have to date, they’re great. However, one bad move could hurt the firm’s balance sheet, investor sentiment, and shares, as poor acquisitions can be costly to dispose of.
The investment case looks good at the moment, as the shares offer a yield of 2.8% for passive income. It’s worth noting that the shares aren’t as cheap as the other two options, trading on a P/E ratio of 14.
