With £5,000, I’d consider buying these FTSE 100 shares first

The recovering businesses behind these FTSE 100 stocks have decent forward-looking growth prospects and modest valuations.

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Several stocks in the FTSE 100 look attractive to me and I’d target them now if I had a spare £5,000 to invest.

For example, home improvement products retailer Kingfisher (LSE: KGF) is continuing what looks like a cyclical recovery.

Rising earnings likely ahead

City analysts expect normalised earnings to rebound by almost 18% next year. Meanwhile, operating cash flow’s been robust for several years. The company’s even engaged in a share buyback programme, suggesting the business has more than enough cash to power its operational momentum and growth.

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Kingfisher operates across Europe, but in the UK its prominent brands are B&Q and Screwfix. However, despite the strength in those names, like all retailers, Kingfisher’s vulnerable to the ups and downs of the wider economy.

If we get another downturn any time soon it’s almost inevitable that earnings and the stock price will move lower. If we get the timing wrong, it’s easy to lose money on the shares.

The volatility shows up in the share price chart and in the financial record.

Created with Highcharts 11.4.3Kingfisher Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Nevertheless, with the stock in the ballpark of 284p, the forward-looking valuation isn’t too demanding. Set against analysts’ expectations for the trading year to January 2026, the forward-looking price-to-earnings ratio’s just below 12. That compares to the overall projected rating of the FTSE 100 at close to 14.

Meanwhile, Kingfisher’s anticipated dividend yield’s a little under 4.3%, and that strikes me as a potentially handy income to collect while waiting for further business progress to unfold.

An impressive turnaround

However, I’m also keen on the splendid-looking turnaround and recovery playing out with Marks and Spencer (LSE: MKS). All the same risks apply regarding cyclicality in the retail sector, but the stock — and the business — are going great guns.

Created with Highcharts 11.4.3Marks And Spencer Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

City analysts have pencilled in double-digit percentage increases for normalised earnings for this year and next. Meanwhile, with the stock near 333p, the forward-looking earnings multiple’s running at just under 12, suggesting another undemanding valuation.

Despite the momentum in the business, chief executive Stuart Machin sounded determined back in May’s full-year results report when he said: There remains much work to do and that’s a good thing as every challenge is an opportunity for growth”. 

It’s possible the progress so far from these two stocks may be just beginning. So I’d be keen to carry out further and deeper research with a view to splitting a £5,000 investment equally between the two companies.

However, they’re both in the same sector. So I’d aim to make follow-up investments in different industries to maintain the diversity in a portfolio focused on the longer term.

We’ll find out more about recent progress from Marks and Spencer with the half-year results due on 6 November. But before that, Kingfisher should update the market about half-year trading on 17 September.

I’ll be watching out for the companies’ news and looking for opportune times to enter these stocks such as market dips and down days.

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Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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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