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FTSE 100 stocks: 2 to buy

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I believe there are plenty of outstanding companies in the FTSE 100. I’m looking to take advantage of this by acquiring some of these blue-chip stocks for my portfolio. Here are two companies that have recently attracted my attention.

Market-leading FTSE 100 stocks

The first stock on my list is Relx (LSE: REL). The global provider of information-based analytics and decision tools is one of the few data-driven businesses in the FTSE 100. Its focus on data has helped the firm overcome the worst of the pandemic. 

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According to the company’s latest trading update, management expects the group’s three largest divisions — Scientific, Technical & Medical (STM), Risk, and Legal — to deliver another year of underlying revenue and adjusted operating profit growth in 2021.

Unfortunately, one part of the FTSE 100 business holding back growth is its Exhibitions division. This accounted for 5% of revenue in 2020, and it continues to be significantly impacted by the pandemic.

Management is unsure when this part of the group will see a recovery, but with Exhibitions only making up tiny percentage of revenues, I’m not too concerned. If the other parts of the business continued to expand, they’ll make up the difference in a couple of years. 

The data business is all about scale. The more information a company has, the more significant its competitive advantage. Relx owns the rights to a vast amount of data, which is why I’d buy the the business for my portfolio today. 

However, owning data comes with some challenges. Primarily, the company will have to make sure its security is always up to scratch. A cybersecurity breach could lead to hefty fines and may jeopardise its reputation. This is probably the most considerable risk the group faces today. 

Retail champion

JD Sports (LSE: JD) is one of the UK’s greatest retail success stories. Founded in 1981 in Manchester, the group now has around 3,300 stores globally. 

JD’s earnings have understandably taken a hit with the group’s physical locations subject to various closures throughout the pandemic. However, management is expecting a rebound this year. In its financial year ending 1 February 2020, JD’s pre-tax profit totalled £349m.

According to the company’s latest trading update, it’s on track to deliver pre-tax profit for its current financial year of “no less than” £550m.

I think these numbers show the company’s potential and highlight its competitive advantages. Retail is incredibly competitive, and many other retailers are currently struggling to adapt to the new normal and the world of e-commerce. 

It looks to me as if JD has managed this transition incredibly well. Still, I’m aware the company’s success shouldn’t be taken for granted. Retailers’ fortunes can change overnight, so this enterprise might not be suitable for all investors. 

Nonetheless, even after taking this risk into account, I’d buy the FTSE 100 stock for my portfolio right now. 

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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended RELX. 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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