The FTSE 100 has experienced a strong comeback after its recent market crash. However, many stocks still appear to offer excellent value for money and long-term growth potential.
As such, buying these companies for a Stocks and Shares ISA today may lead to substantial capital gains as well as a steady income stream. Here are three FTSE 100 companies that could be worth buying today, based on the above.
FTSE 100 homebuilder
FTSE 100 homebuilder Persimmon (LSE: PSN) saw its share price crash by more than 50% at the start of the coronavirus crisis. Since then, the stock has staged a modest recovery as work has restarted on many of its sites.
Despite this setback, the outlook for Persimmon appears healthy. The UK faces a structural housing shortage, and this is only getting worse.
The government is relying on companies like Persimmon to meet the growing demand for homes across the UK. This should ensure the FTSE 100 company has plenty of work for the foreseeable future. Rising home prices and government initiatives such as the Help to Buy scheme may mean the group’s earnings recover quickly from the coronavirus crisis soundtrack.
As such, with the stock down around 10% year-to-date, now could be a great time to snap up a share of this long-term growth champion.
Industrial group BAE Systems (LSE: BA) has outperformed the FTSE 100 by 10% since the start of the year. Investor sentiment has been buoyed by the company’s defensive nature and growing order book. The organisation announced orders of £18.4bn during 2020, putting the backlog at £45.4bn.
In addition, the FTSE 100 company plans to generate free cash flow of £3.5bn-£3.8bn over the next three years. At a time when so many businesses are struggling to keep the lights on, this forecast is hugely positive.
Despite this, BAE currently trades on a relatively low valuation. It has a price-to-earnings (P/E) ratio of around 11.7, which suggests investors are sanguine about its outlook. Although there may be less scope for a further upward rerating over the medium term, the company’s free cash flow and the robust order book is highly exciting.
Another FTSE 100 share that’s made substantial gains over recent months is Smurfit Kappa (LSE: SKG). Its share price is up 1% since mid-March as investors have become increasingly optimistic about the company’s long-term prospects.
Investor sentiment has also been boosted by the decision of two of the company’s directors to splash £150,000 buying shares towards the end of April.
An increase in online retail sales during the lockdown has lead to improved prospects for the paper and packaging market this year. Indeed, Smurfit delivered sales volume growth in Europe and the Americas during the first three months of the year.
With funding of €1.5bn available to the FTSE 100 group, it seems to have plenty of capital to meet this boom in demand. Unfortunately, the group has pulled its dividend, but seems sensible considering the current economic environment.
Since the stock currently trades on a price-to-earnings-growth (PEG) ratio of just 0.9, it appears to offer a wide margin of safety. Therefore, now could be a great time to buy a share of this business for the long haul.
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Rupert Hargreaves 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.