I’m constantly hunting for the best FTSE 100 stocks to buy, yet I still develop blind spots. These two companies have enjoyed a storming five years, yet I’ve barely given them a look in. Is it too late to buy them?
The last time I wrote about international engineering group IMI (LSE:IMI) was back in October 2020, when it was still in the FTSE 250. The shares were rebounding from the pandemic and I said they had bags of recovery potential. I was right.
The share price has soared
The IMI share price is up 115% over the last five years and has surged 50% in the last 12 months alone. Dividends are on top.
IMI designs, builds and services specialist fluid and motion control products. As an industrial business, it’s sensitive to economic cycles, but lately that’s been in its favour. IMI is now on track for a fourth consecutive year of mid-single-digit organic revenue growth. Strong cash generation gives it, in CEO Roy Twite’s words, “the flexibility to invest in organic growth, pursue bolt-on acquisitions, and return capital to shareholders”.
The trailing yield is a modest 1.1%. However, the board as an impressive track record of increasing dividends every year since 2004, with the exception of pandemic-stricken 2020, when shareholder payouts were slashed 45%. Sneakily, they were rebased from there, but have climbed steadily since.
The valuation isn’t cheap, with a P/E of 23.5, but it’s not outrageous either. My hesitation is more about timing. If the global economy stumbles, industrials could wobble. Also, broker forecasts put the one-year consensus target at 2,876p, that’s fractionally below today’s price. Targets are only estimates, but they reinforce my suspicion that I may have missed my moment here. Blind spots can be costly. I’ll pay more attention next time.
Antofagasta is back on my radar
It’s also been far too long since I covered Chilean copper miner Antofagasta (LSE: ANTO). Thankfully, others haven’t ignored it. On 8 February, my colleague Zaven Boyrazian said it “is seemingly perfectly positioned to capitalise on the global structural supply deficit for copper”.
Investors clearly agree. The shares are up 110% over the last year, making it the fifth-best performer on the entire FTSE 100.
That said, there have been recent broker downgrades. Morgan Stanley warned about record valuations. Canaccord Genuity suggested investors may find better value in smaller-cap copper names. With the P/E above 40, that’s hardly surprising. Especially in a cyclical sector like mining.
Yet the momentum continues. The Antofagasta share price climbed past 4,000p after last Tuesday’s full-year results (17 February) showed revenue up 30% to $8.6bn and pre-tax profit jumping 53% to $3.16bn, driven by stronger copper and gold prices.
Again, I worry I’m arriving late. Copper demand looks structural, particularly with artificial data centres now peppering the planet. But if AI proves overhyped, or the global economy slows, copper prices could quickly cool. Consensus forecasts produce a one year target of 3,510p. Which is actually 12% below’s today’s figure.
I prefer to buy stocks before they fly, not chase them afterwards. This requires vigilance though, and a willingness to look beyond the same familiar names. There are some great value FTSE 100 stocks to buy today. Time to take the blinkers off.
