FTSE 100 shares: 1 I’d buy today and 1 I wouldn’t touch with a bargepole

Here this Fool takes a look at two FTSE 100 shares. One’s a data provider he’d like to buy. The other’s a telecoms giant he’d avoid.

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A number of FTSE 100 shares have had an awesome run in 2024 so far. The index has reached record highs in the past couple of months. Even so, I think plenty of stocks still look like savvy buys.

That said, while I like the look of a number of Footsie constituents, not all take my fancy. If I had the cash, here’s one I’d buy today and one I’d avoid.

An AI play

Let’s start with a stock I’m eyeing: London Stock Exchange Group (LSE: LSEG). It’s up 3.6% this year, slightly less than the FTSE 100 (5.9%). But zooming out, the financial markets data stalwart is up 14.1% over the last year and 64.7% in the last five.

Should you invest £1,000 in Barclays 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 Barclays made the list?

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Created with Highcharts 11.4.3London Stock Exchange Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

I like the stock due to its strong market position. It provides data to 99 of the top 100 global banks.

But there’s actually another reason why I want to add it to my portfolio. It recently announced a 10-year partnership with Microsoft, which will see artificial intelligence (AI) play a larger role in the products and services it provides.

As part of the deal, Microsoft took a 4% equity stake in the business. The move is “expected to increase LSEG’s revenue growth meaningfully over time as new products come on-stream“.

The stock does looks expensive. It’s trading higher than the FTSE 100 average. The financial data sector can also be highly competitive, which is another risk.

But as a long term buy-and-hold, I’m bullish on the stock, especially if it continues to expand further into the AI sector.

What’s more, while on the surface it may not look like your typical income stock, with its payout having grown at an annual compound growth rate of 14.6% during the last decade, there’s certainly potential for its 1.2% dividend yield to keep rising.

A value trap

One stock I plan to avoid like the plague is Vodafone (LSE: VOD). The stock is up a mere 0.2% year to date. It’s down 2.7% over the last year. But the telecoms giant has lost 45.9% of its value in the last five years.

Created with Highcharts 11.4.3Vodafone Group Public PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

At 59.9p, its shares may now look like a steal. And with it making some progress with its turnaround strategy, investors may be tempted to dive in.

The business continues to streamline after offloading its Spanish and Italian businesses for €5bn and €8bn, respectively. It also has plenty of potential for growth in exciting regions like Africa.

But there are a few reasons why I’m steering clear. Firstly, it has an alarming amount of debt (€33.2bn) on its balance sheet.

Secondly, its 10.9% yield looks tempting but is set to be cut in half next year from 9 cents a share to 4.5 cents. Its current payout is unsustainable. Its new yield will still be above the FTSE 100 average. Yet there’s always the risk it could be cut again further down the line.

With its poor share price performance over the last five years, I’m wary the stock could be a value trap. For that reason, I wouldn’t buy it today.

Like buying £1 for 31p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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.

Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Microsoft and Vodafone Group Public. 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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