With the FTSE 100 having risen by over 7% in the last month, investor sentiment appears to be buoyant. While there is scope for a pullback should economic data disappoint, the long-term prospects for the index continue to be relatively bright.
For example, the world economy is performing well, while investors appear to be comfortable with the expected path of interest rates over the medium term. And while political risks such as Brexit remain, valuations seem to factor them in.
As a result, buying FTSE 100 stocks now for the long term seems to be a shrewd move. Here are two shares which could therefore be worth a closer look.
Reporting on Thursday was information services company Experian (LSE: EXPN). It released full year results showing that fourth quarter revenue growth was 12%. It increased by 8% on an organic basis in the quarter, with its North America Consumer Services division returning to growth. Trends in the UK also saw improvements and company was able to make further progress with its overall growth strategy.
With Experian experiencing positive momentum in its B2B segment and in Consumer Services, it seems to offer a relatively reliable growth outlook. The acquisition of ClearScore will extend its services to UK consumers, while its consumer identity protection offers have received a good initial market reception.
Looking ahead, Experian is forecast to report a rise in its bottom line of 10% in the current year, followed by a further 8% gain next year. With the company having a relatively solid track record of improvements, and what seems to be a sound strategy, it could generate impressive levels of capital growth. Therefore, it could be worth buying now for the long term.
Also offering long-term growth potential is Primark owner ABF (LSE: ABF). The company has been able to deliver a consistent performance in recent years, with its bottom line rising in four of the last five financial years. The diversity of its business model aids it in this respect, with it having the capacity to offset poor performance in one division with impressive gains elsewhere.
The company’s Primark division continues to grow in size and importance. It has significant scope to expand across Europe, and Primark could prove to be a key growth catalyst over the medium term in Britain. Despite UK retail’s problems, with consumers in this key market suffering from low confidence, this could provide growth opportunities for budget retailers.
With ABF having a forecast earnings growth rate of 6% this year and 9% next year, it appears to have a bright outlook. Certainly, it may not be the fastest growing share in the index, but with a diverse business model it may offer a sound risk/reward ratio. As a result, now could be the right time to buy it for the long run.
Peter Stephens has no position in any of the shares mentioned. The Motley Fool UK has recommended Associated British Foods and Experian. 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.