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Have £1,000 to invest? Here are 2 FTSE 100 shares I’d buy in an ISA today

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Making money from stocks doesn’t have to be complicated. I reckon that all you have to do is buy good quality FTSE 100 shares, put them into a tax-free Stocks and Shares ISA, and leave them alone.

This is pretty much the approach that’s taken by top UK fund managers such as Nick Train and Terry Smith. It’s definitely what I’d do if I was investing £1,000 in the UK stock market today. Here are two FTSE stocks that are on my shopping list today.

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Retail superhero

Sometimes there’s one company that stands out from the crowd. In UK retail I think that company is FTSE 100 fashion retailer Next (LSE: NXT). Although the firm is widely associated with high street retail, Next now makes more than half its profits online.

Indeed, the company already has a plan to go 100% online if its stores become too costly. However, this doesn’t seem likely to me just yet.

Rents have been falling in recent years and the stores are still making money. Shops are also an important part of Next’s online delivery and returns service. Nearly 50% of orders are collected from stores, while 80% of returns are made through stores. This seems to be a service that’s valued by customers, but isn’t available from online-only retailers.

The Amazon of fashion?

Next isn’t just selling its own stock online anymore, either. The firm’s online marketplace now stocks branded goods from a huge range of other brands, supporting the group’s continued online growth. I’m starting to think of this FTSE 100 share as the Amazon of UK fashion.

The only question mark about Next in my mind is whether the group will be able to maintain steady earnings growth in future years. I don’t have a crystal ball, but I’m willing to trust management who have delivered for shareholders over many years.

As I write, Next shares are changing hands for 15 times next year’s forecast earnings. I don’t think that’s too bad for a company with a 20% operating margin and little debt. I’d buy the shares for a long-term portfolio.

This FTSE 100 share is dull but profitable

My next choice is a company you may not have heard of. Mondi (LSE: MNDI) is one of the world’s largest packaging businesses, with sales of around €7bn each year.

The company’s product range covers pretty much every type of packaging, from heavyweight cardboard through to more technical items such as “release liners” and “barrier coatings”.

During the first half of the year, widespread global lockdown caused some disruption to Mondi’s operations. But the firm says that strong demand for consumer goods and ecommerce packaging helped to offset weaker demand in industrial markets.

Overall, it wasn’t such a bad start to the year. Although pre-tax profit fell by 26% to €466m, the business still showed attractive profitability with, a return on capital employed of 17%. That’s well above average for a FTSE 100 share.

Packaging stocks are unloved at the moment as investors fear that a global recession could cause demand to slump. I think these fears may be overdone. Mondi looks good value to me on 12 times 2021 forecast earnings, with a dividend yield of 4%. I see this as a stock to buy and hold.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Roland Head has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK owns shares of Next and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. 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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