2 FTSE 100 shares I’m thinking of buying in August!

These FTSE 100 shares could deliver exceptional shareholder returns for years to come. I’m doing some intensive research to see whether I should buy.

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Looking for the best FTSE 100 shares to buy this month? Here are two top quality blue-chips on my watchlist.

BAE Systems

Created with Highcharts 11.4.3BAE Systems PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

It’s not just US tech stocks that have sold off sharply in recent weeks. Defence shares have also fallen as investors moved to locked in profits following earlier share price strength.

As I type, BAE Systems‘ (LSE:BA.) share price is down 7% over the past month. I think this pullback represents an attractive opportunity for me to open a position.

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This FTSE 100 share’s one of the world’s biggest defence contractors. It supplies military equipment across the world, and is a critical supplier to the US and UK armed forces. And it’s enjoying record levels of orders as global rearmament increases at the fastest pace since the Cold War.

Regrettably, the scale of global tensions mean that weapons demand could have much further scope to grow. Sir Roland Walker, head of the British Army, has said it needs to treble its fighting power by 2030 to counter the perceived threat of China, Russia and Iran. Expect arms budgets to keep increasing.

City analysts are expecting BAE Systems to report strong earnings growth for the next few years at least. A predicted 7% bottom-line rise this year is followed by forecast increases of 12% and 10% for 2025 and 2026 respectively.

With a forward price-to-earnings (P/E) ratio of 18.3 times, BAE Systems’ shares still trade at a premium to the broader FTSE 100. But despite the danger of contract lumpy timings and project development issues, I think the defence giant merits this premium.

The Berkeley Group

Created with Highcharts 11.4.3Berkeley Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Housebuilders like The Berkeley Group (LSE:BKG) remain under pressure from higher-than-normal interest rates. While this remains an ongoing threat to housing demand, weakening inflation means the Bank of England could cut rates multiple times over the next year.

Encouragingly, mortgage rates are falling again in what’s tipped by some as a sign of an improving environment for homebuyers.

Last week, Nationwide became the first lender to offer a rate below 4% for the first time in years. Industry experts think this could set off a new race among lenders that could ignite the market.

This isn’t the only good news the likes of Berkeley have received recently. Following the general election, Labour confirmed its plan to build 1.5m new homes between now and 2029. A bonfire of planning rules to make this a reality could boost homebuilder profits for years to come.

Berkeley isn’t out of the woods yet, of course. City analysts think annual earnings will fall 7% and 6% in the next two financial years before rebounding thereafter.

But with a forward P/E ratio of 14.2 times, Berkeley’s cheaper than its FTSE 100 rivals, and so could be a better way for value investors like me to capitalise on a housing market recovery.

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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 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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