What if there could be only one FTSE 100 stock in a portfolio?
It’s an interesting concept and focuses the mind.
So what’s the best and most investable stock in the Footsie today? It’s subjective, of course, but for myself, I’ve narrowed the search down to a couple of contenders.
A turnaround in action
The first is retail giant Marks and Spencer (LSE: MKS). After years of trying, the company is executing a turnaround that seems to be working.
These days, it’s all about hybrid retailing where companies back up an internet presence with shops and outlets on the ground. M&S does this well. The omnichannel retailer’s online international clothing and home sales have been growing well.
On top of that, recent data shows the firm’s food sales have been growing faster than Aldi’s, which itself has been expanding like mad in recent years.
City analysts predict rising earnings and shareholder dividends ahead. Meanwhile, with the share price in the ballpark of 246p (as of 13 March), the forward-looking price-to-earnings (P/E) multiple sits just below 10 for the trading year to March 2025.
That’s not a stretched valuation when compared to the overall Footsie median rolling P/E of around 14.
However, the retail sector can be volatile. The company has plenty of experience of getting things wrong and it could do again. Perhaps that’s the biggest risk for investors who are tempted by the shares today.
Nevertheless, I’m optimistic about the general economic outlook and see M&S as a serious contender for being considered the best FTSE 100 stock available today.
Slick finances in a defensive sector
But I’m also attracted to Switzerland-based bottler of Coca-Cola products, Coca-Cola HBC (LSE: CCH). As the name suggests the company operates as a “growth-focused” consumer packaged goods business and strategic bottling partner of the The Coca-Cola Company.
The firm has defensive cash-generating credentials and an impressive multi-year record of growth in revenue, earnings, cash flow, and shareholder dividends. Meanwhile, I don’t think the current valuation is excessive.
With the share price near 2,495p (13 March), the forward-looking earnings multiple is just below 14 for 2024. Meanwhile, City analysts expect the dividend to yield 3.3%. That suggests the potential for handy income for shareholders while waiting for further growth to arrive.
If those analysts are correct, we could see the firm deliver an 11% uplift in earnings during 2025, extending a long record of progress.
As with all stocks there are risks. Maybe Coca-Cola products will lose their popularity, especially if consumers’ finances become squeezed again. It would be easy for people to switch to cheaper brands, and shareholders in Coca-Cola HBC could then suffer.
Decisions, decisions — which stock should I choose? On balance, I prefer Marks & Spencer. To me, it’s perhaps the best and most investable stock in the FTSE 100 today, and I’d be happy to hold it for at least five years.
