There are some great stocks in the FTSE 100 index. Here are three I’d buy in August.
These days, data is gold. And I reckon Experian (LSE: EXPN) is a great way to play this investment theme. The company recently posted a quarterly trading update in which it delivered strong growth across all its divisions.
It’s a good sign when a company generates great performance in all its segments during three months. Of course there’s no guarantee that it can continue. But what I found encouraging was its positive outlook.
The FTSE 100 company upgraded its revenue growth guidance for its full-year. What’s more it now expects a large portion of this uplift to be organic. In short, Experian believes it can deliver this without acquiring businesses and by expanding its own capacity. This is great news because it could mean that profitability could also rise.
But the shares aren’t cheap and that’s a risk if its performance wobbles. The stock trades on a price-to-earnings (P/E) ratio of 40x and doesn’t generate much dividend yield.
I’d snap up BP (LSE: BP) shares on the back of rising commodity prices as the economy recovers from the pandemic. But it’s not all about oil and gas. The company is transitioning into renewable energy. In my opinion, it’s taking the right steps now in order to secure its position as an energy leader in the future.
What I also like about this FTSE 100 stock is that it’s improving its financial position at the same time. While it has a lot of plates spinning together, it’s good to see that the board is focused on improving the balance sheet.
BP reached its net debt target early due to the disposal of assets. It also announced $500m of share buybacks in the second quarter. It now shows that the firm can afford to make capital returns and that its financial strength has become stronger.
The shares pay a dividend yield of approximately 7%. Of course there’s no guarantee that this level of income will continue in the future. But it should keep investors happy until BP can further improve its balance sheet and increase its green energy exposure.
But BP is still highly dependent on the price of oil. If this falls, then it’s likely that the stock will decrease too.
I became bullish on BT (LSE: BT-A) last month. What change my mind was when Patrick Drahi’s company, Altice, took a 12% stake in the business. I reckon this investor could accelerate change and turn the firm around.
Of course, this isn’t going to happen overnight but with Altice’s experience, it could happen quicker than many investors anticipated. The FTSE 100 company already has ambitious plans to roll out its full fibre broadband.
Prior to the investment, I’d have thought this goal was out of reach. But I think this target could actually be attainable now with Altice’s extensive experience in the sector.
But BT shares do come with risk. The firm has significant amount of debt and a pension deficit, which could weigh heavily on the stock.
The stock has a current price-to-earnings ratio of 10x. This cheap valuation is too hard for me to ignore, hence, I’d buy.
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Nadia Yaqub has no position in any of the shares mentioned. The Motley Fool UK has recommended 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.