Which FTSE 100 stocks could benefit after the UK’s premier index reaches all-time highs?

As the FTSE 100 hit all-time highs yesterday, our writer details which stocks could be primed to climb upwards.

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Yesterday saw the FTSE 100 climb to record highs, closing on 8,023p. I reckon this is good news, as it shows investor appetite and sentiment could be on the up.

With that in mind, a fair few stocks could benefit nicely. Two picks on my radar at present, that I feel could be good buys ahead of any potential surge, are BAE Systems (LSE: BA.) and Next (LSE: NXT).

Here’s why I’d be willing to buy some shares in both when I next can.

BAE Systems

The shares are up 29% over a 12-month period, from 1,022p at this time last year, to current levels of 1,328p.

It goes without saying that a peaceful resolution to all conflicts is something I personally hope and pray for. However, BAE has benefitted from recent geopolitical events.

Defence spending is currently at all-time highs, according to Statista. Furthermore, trends show this is only set to rise. Naturally, this is good news for BAE. It’s worth mentioning that defence is much more than weapons. It covers many aspects, from cyber security to border control, and more.

BAE’s in an excellent position to ensure it can continue to grow performance and provide shareholder value, if you ask me. Its wide coverage and reputation in the market are unmatched. The business has a massive order book it can count on to keep the cash rolling in. Plus, this supports a healthy balance sheet, as well as potential for future dividends.

The shares offer a dividend yield of 2.3% at present, but I can see this growing. However, I’m conscious that dividends are never guaranteed.

From a bearish view, a concern of mine is if a BAE product were to fail, this could have costly financial and reputational damage to the business and shares. Plus, defence spending could be scaled back if world peace were to occur tomorrow. I know it’s an unlikely event, but still something to consider.

Next

Improving sentiment and potential rate cuts could be good news for one of the biggest UK retailers.

Next shares are up 33% over a 12-month period, from 6,872p at this time last year, to current levels of 9,166p.

A big part of this rise has been resilient performance, the firm’s wide coverage, and brand power. Plus, Next has been investing heavily into its infrastructure to boost growth.

These aspects could go a long way to taking Next shares to the next level if rates come down, leading to improved sentiment and stronger consumer spending.

At present, the shares offer a dividend yield of 2.3%, and I can see this growing. Furthermore, the shares look cheap to me on a price-to-earnings ratio of 13.

The biggest risk for Next right now is continued economic volatility. Inflation may be coming down, but consumers are still battling heightened costs across many aspects of essential living. These include mortgages, rent, food, and energy. A short-term dip in Next shares’ performance wouldn’t come as a surprise to me.

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.

Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended BAE Systems. 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.

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