While the FTSE 100 has had a good run since March, there are still a number of shares within the index I’d be happy to buy today. Here’s a look at two Footsie stocks that, in my view, have plenty of room for growth.
This FTSE 100 company just added 84,000 new customers
One FTSE 100 company that looks attractive to me from an investment point of view today is Hargreaves Lansdown (LSE: HL). It operates the largest retail investment platform in the UK.
I’m bullish here for a couple of reasons. Firstly, over the last year or so, interest in investing and trading has skyrocketed. This has benefitted Hargreaves Lansdown. However, it doesn’t seem to be reflected in the company’s share price. Over the last 12 months, HL’s share price has actually fallen 6%.
Secondly, Britons need to save and invest more for retirement. As the UK’s largest investment platform, Hargreaves looks well-placed to benefit in the long run.
The business posted a strong set of half-year results recently which showed the company has momentum right now. For the six months ended 31 December, revenue was up 16% to £299.5m, while diluted earnings per share were up 10% to 32p.
Encouragingly, the company added 84,000 new customers over the period. That represents an increase of 68% on the number of customers it added in the same period in 2019. As a result of this performance, the company increased its dividend by 6%.
There are risks to the investment case, of course. The threat of competition is one. One rival in particular that looks to be capturing market share is Trading 212. The stock’s forward-looking price-to-earnings (P/E) ratio of 26 also adds some valuation risk.
Overall, however, I think the investment case is compelling. I’d buy this FTSE 100 share today.
A work-from-home play
Another FTSE 100 stock I like the look of right now is JD Sports Fashion (LSE: JD). It’s a leading sports fashion and footwear retailer that operates in the UK, Europe, the US, Asia, and Australia.
JD Sports has a number of things going for it right now. Firstly, it’s benefiting from the increased focus on health and exercise, which is boosting demand for trainers and athleisure wear. Secondly, it’s benefiting from the work-from-home trend, which is boosting demand for loungewear.
News from JD Sports has been encouraging recently. In a trading update posted on 11 January, the company said demand has remained robust throughout the second half of 2020 and that revenues for the 22-week period to 2 January were up 5% year-on-year. That’s pretty impressive when you consider many stores were closed at times during these periods.
Additionally, the group said it was confident profit before tax for the full year to 30 January would be “significantly ahead” of the current market expectations.
However, there are a couple of risks here I’m keeping a close eye on. One is the fact that companies like Nike are increasingly selling direct to consumers. This could impact JD in the future. The second is the group’s global expansion. These don’t always go to plan.
All things considered however, I think this FTSE 100 share offers an attractive risk/reward proposition. The forward-looking P/E ratio of 23 seems quite reasonable, to my mind. I’d be happy to buy this stock for my portfolio today.
