The FTSE 100’s on fire, but what’s the best stock to buy now?

With the UK stock market starting to surge, it’s time to hunt for the best stocks to buy now. But what’s the best opportunity in 2024?

| 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.

Asian man looking concerned while studying paperwork at his desk in an office

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.

With equities finally on the rise, investors across the country are on the hunt for the best stocks to buy now. The FTSE 100’s climbed 13% since the start of the year, including dividends, almost doubling its typical historical annual average.

Seeing such performance in the wake of the market downturn in 2022 is a welcome change of pace. And with the deputy governor of monetary policy, Ben Broadbent, announcing that a summer interest rate cut was possible, even more growth could be just around the corner.

That’s terrific news for many businesses, but especially for Rolls-Royce (LSE:RR.), which is already among the top-performing large-cap stocks on the London Stock Exchange. Let’s explore why.

Should you invest £1,000 in Barratt Developments right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Barratt Developments made the list?

See the 6 stocks

Lower rates, cheaper debt

It was only a few years ago that a serious debate was going on relating to whether Rolls-Royce could potentially implode under its massive debt load. The pandemic proved to be an absolute disaster for this business, with around half of its top-line income evaporating.

Today, such concerns are a thing of the past. Thanks to new and prudent leadership, the company’s undergone a rapid, radical change that’s restored profitability and free cash flow generation. After years of lacklustre performance, Rolls-Royce has quickly begun climbing back up the ladder within the FTSE 100. And since the start of the year, the engineering giant’s market-cap has increased by an impressive 50.4%.

However, while the cracks in the balance sheet are slowly being filled, debt remains a significant burden for this enterprise. As of December 2023, £5.76bn of loans and lease liabilities are still outstanding. And that means a significant chunk of operating earnings is being used up to service these liabilities.

However, when interest rates start to fall, eliminating this leverage becomes far easier. Not just because debt’s cheaper. But also because customers will also be able to secure cheaper financing, leading to an increased probability of new larger orders, bolstering Rolls-Royce’s cash flows even further.

The best pick?

Finding the best investment within the FTSE 100 today isn’t always straightforward. Rolls-Royce certainly appears to be on track to deliver some of the best stock performance this year. However, as previously pointed out, the company still has a lot of challenges to overcome. And this added risk may not be everyone’s cup of tea.

Since every investor has different risk tolerances, objectives, and timeframes, pining down the best stocks to buy ultimately depends on the individual. However, Rolls-Royce may not be a bad place to start searching.

The global travel market’s almost made a complete recovery from the pandemic, with current consensus indicating it will continue to grow. Meanwhile, a growing number of international conflicts provides a catalyst for the group’s Defence segment. And investments being made into small modular nuclear reactors could position the firm as a future titan in the energy industry.

Of course, competition remains a prevalent threat. So like all investments, there are never any guarantees.

But this isn’t the only opportunity that’s caught my attention this week. Here are:

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

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.

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Rolls-Royce 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 For Beginners

Investing Articles

2 cheap FTSE 100 and FTSE 250 shares to consider for an ISA before 5 April!

These FTSE 100 and FTSE 250 shares are on sale today! Here's why long-term Stocks and Shares ISA investors should…

Read more »

Investing Articles

How I’m building a new second income for 2035

Millions of us invest for a second income. Here are the steps Dr James Fox is taking in order to…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing For Beginners

Why FTSE 100 investors should pay attention to ‘Liberation Day’

Jon Smith explains why the upcoming tariff announcement from across the pond could have an impact on the FTSE 100,…

Read more »

Investing Articles

3 top FTSE 100 shares to consider for a new ISA

The FTSE 100 is packed with top-notch companies that can form the building blocks of a quality Stocks and Shares…

Read more »

Investing Articles

Is buying gold stocks the best way to capitalise on bullion’s bull run?

Forget about gold bars, coins, and funds for a moment. Here's why considering gold stocks could be the best option…

Read more »

Investing For Beginners

Want to invest in an ISA but scared of a stock market crash? Consider this

A stock market crash or dip can be a great time to buy FTSE 100 stocks at reduced prices. Harvey…

Read more »

Investing Articles

1 crucial thing to do as the 2024/25 ISA deadline approaches

This time of year is a great time to check your ISA strategy and make sure you’re positioned for long-term…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

How much would an investor need in a Stocks and Shares ISA to generate £20k a year in passive income?

Edward Sheldon calculates how much one would need to generate a chunky annual passive income with dividend stocks. And it…

Read more »