3 of the best FTSE 100 stocks to consider in May

FTSE stocks are back in fashion as investors look for undervalued shares. Here are some our writer Royston Wild thinks are worth considering today.

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With the FTSE 100 tearing to new record highs, now could be a great time for investors to splash out on UK blue-chip shares.

Here are three I think are worthy of serious consideration this month.

Stunning returns

In the past 20 years, no current Footsie stock has provided better returns than rental equipment business Ashtead Group (LSE:AHT).

The firm has built itself to become a major industry player in that time, thanks primarily to a rolling programme of shrewd acquisitions. And it has no intention of dialling back its aggressive growth strategy. It made 26 more acquisitions in the nine months to January. This is a positive omen.

Ashtead’s share price has sunk more than 7% in less than a week. It’s fallen as hopes of interest rate cuts have faded, a scenario that could drag on near-term earnings growth.

Following this decline, I’m considering increasing my own stake in the business. The rental equipment industry’s highly fragmented, leaving room for many more profits-boosting acquisitions. And the long-term outlook for the construction industry remains extremely bright.

10% dividend yield

I also like the look of M&G (LSE:MNG) following a significant share price reversal. It now trades on a forward price-to-earnings (P/E) ratio of 8.8 times.

On top of this, its dividend yield for this year stands at 10%. This could make it an excellent buy for investors seeking a market-beating passive income.

Like Ashtead, the company’s dropped as hopes of interest rate cuts have faded. But this isn’t the only danger to profits. M&G operates in a highly competitive industry and has to paddle extremely hard to succeed.

But there’s also a lot I like about this UK share. Most of all, I’m keen on its strong position in a marketplace with significant long-term growth potential. I expect earnings here to rise strongly over the coming decades as demographic changes drive demand for savings and investment products.

I also like M&G due to its improving balance sheet. A Solvency II ratio of 203% gives it scope to continue paying large dividends and to invest in the business for future growth.

Metals mammoth

Commodities giant Glencore‘s (LSE:GLEN) share price has soared in 2024, thanks to rising metal prices, and in particular copper. With commodity prices tipped to keep climbing, now could be the time to buy this Footsie share.

Mining can be a highly problematic (and thus costly) activity. This means that earnings can come under severe pressure, even if metal prices increase.

Fortunately, Glencore also has a sprawling trading arm which helps to mitigate this risk. In fact, this unit’s thriving at the moment. Earnings here are tipped to hit the higher end of forecasts in 2024, the company announced this week, at between $3bn and $3.5bn.

I’m confident that owning Glencore shares could yield excellent long-term returns. Trends like decarbonisation, urbanisation, and the AI revolution are tipped to supercharge commodities demand in the coming decades.

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.

Royston Wild has positions in Ashtead Group Plc. The Motley Fool UK has recommended M&g 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.

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