Looking for the best FTSE 100 stocks to buy and hold for the long haul? Here are two blue-chip stars to consider.
Babcock International
Unfortunately, the geopolitical backdrop’s becoming more dangerous, making defence stocks such as Babcock International (LSE:BAB) hot property right now.
This particular arms contractor has risen around three-quarters in value over the last year. Yet on paper it still looks incredibly cheap, leaving scope for further price gains.
Babcock’s tipped to deliver a 7% earnings increase this year (to March 2026). This leaves it trading on a price-to-earnings (P/E) ratio of 18.1 times.
By comparison, the forward earnings multiples of some of Europe’s other major defence contractors are far higher, at:
- 25.2 times for BAE Systems
- 64.4 times for Rheinmetall
- 30.6 times for Leonardo
- 35.7 times for Rolls-Royce
- 32.9 times for Safran
Like those other companies, Babcock’s a critical supplier to defence programmes across NATO. It has especially strong relationships with the UK Ministry of Defence, which is (according to prime minister Keir Starmer) moving towards a state of “warfighting readiness“.
The government plans to raise defence spending to 2.5% of GDP by 2027, and then 3% by 2034. This is good news for Babcock, which sources around 70% of sales from these shores.
The company for instance, is the sole provider of through-life support for the Royal Navy’s submarine fleet. This follows heavy expansion in recent years, which provides exceptional opportunities as the UK plans to expand its fleet (12 new attack submarines are in the works, the government announced this month).
That’s not to say things will definitely be plain sailing for Babcock (no pun intended). Supply chain issues remain a problem across the broader defence sector. The industry’s also highly competitive, posing risks to future revenues and margins.
But on balance, I think it’s a top stock to consider in the current climate. And especially at today’s rock-bottom prices.
Taylor Wimpey
Growing stress in the UK economy poses a threat to housebuilders like Taylor Wimpey (LSE:TW.) in the near term. Phenomena such as growing unemployment and rising inflation could be bad signs for future housing demand.
Yet there are also reasons to be confident that the recent sector uptick can continue. Bank of England (BoE) policymakers remain committed to cutting interest rates to support the flagging economy. There’s also a bloody mortgage rate war being played out that’s helping first-time buyers get on the property ladder.
Taylor Wimpey commented last month that “mortgage lending remains robust” and cheered the “healthy level of product available at competitive rates“. The long-term outlook for the home loan market has improved further too, following BoE changes to stress test rules in March.
Savills says home purchases among first-time buyers could rise to 24% over the next five years. This in turn might lead to average home prices rising an extra 5-7.5% on top of current forecasts, the estate agency said.
Reflecting this improving outlook, City analysts expect earnings on Taylor Wimpey shares to grow 2% in 2025, and by 18% next year.
I think the housebuilder will prove a top long-term investment to consider as Britain’s population steadily grows.
