My favourite FTSE 100 shares to buy

Rupert Hargreaves explains why these two FTSE 100 companies qualify as some of his best shares to buy in the current market environment.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

My favourite FTSE 100 shares to buy today are Admiral (LSE: ADM) and M&G (LSE: MNG). I already own Admiral and would buy M&G for my portfolio. 

There are a couple of reasons why I think these blue-chip stocks look more attractive than any other businesses in the index. 

Blue-chip shares to buy

Starting with M&G, this asset management group, which was once part of the insurance giant Prudential, looks to me to be incredibly undervalued. The stock is currently changing hands at a forward price-to-earnings (P/E) ratio of 4.5. 

Should you invest £1,000 in Burberry Group Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Burberry Group Plc made the list?

See the 6 stocks

On top of its low valuation, shares in the group also offer a market-beating dividend yield of 9.2% at the time of writing. 

So, why is the business so cheap? I think there are two reasons. First of all, it would appear that the market does not trust the enterprise. It has only been an independent business since June 2019, and it has not had time to establish itself as a separate entity.

At the same time, it would appear as if investors are worried about the group’s growth potential. Asset and wealth management is an incredibly competitive industry.

With £370bn of assets under management, M&G is hardly the smallest player in the market, but it is tiny compared to Legal & General and Schroders. The former manages over £1trn of assets while the latter manages more than £700bn

Overcoming these issues is going to be the biggest challenge the group will face as we advance. 

To help increase diversification and boost growth, M&G has been buying smaller wealth managers. It has also been trying to improve its reputation in the City. 

While the company does face some significant risks, if these efforts pay off, I think the FTSE 100 stock could rise in value substantially. That is why it is on my list of the best shares to buy today. 

FTSE 100 growth

Admiral is a different investment altogether. The company is highly regarded by the market as its valuation shows. The stock is selling at a forward P/E of 20. 

Still, I think the company is worth a premium multiple. It is one of the country’s largest car insurers and is spending heavily to increase its exposure in other sectors such as lending and home insurance. The group also has a growing presence in several European markets as well as the US. I think these will be key growth drivers in the years ahead. 

Last year management decided to return money to customers who were no longer using their cars in the pandemic. The cost of this has been more than offset by the increase in positive customer sentiment towards the business. The number of insured customers jumped in the first half of 2021 as a result of this initiative. I think the group will be benefiting from this decision for years to come. 

Despite the company’s attractive qualities, risks such as competition and additional regulations may hold back growth in the future. Indeed, the car insurance market is incredibly competitive. While the FTSE 100 corporation has been able to stay ahead of the competition so far, there is no guarantee this will continue.

Should you buy Burberry Group Plc now?

Don’t make any big decisions yet.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.

And he believes they could bring spectacular returns over the next decade.

Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows...

When such enormous changes hit a big industry, informed investors can potentially get rich.

So, with his new report, Mark’s aiming to put more investors in this enviable position.

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves owns shares of Admiral Group. The Motley Fool UK has recommended Admiral Group, Prudential, and Schroders (Non-Voting). 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.

More on Investing Articles

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

Don’t panic as Warren Buffett retires! Just stick to the Oracle of Omaha’s method

The world's greatest investor Warren Buffett is finally retiring, but this isn't the end of his influence. It’s only the…

Read more »

US Tariffs street sign
Investing Articles

Up 10% in a month! Are the Scottish Mortgage shares the best way to play the tech stock recovery?

Harvey Jones is impressed by the resilience shown by Scottish Mortgage shares during recent turmoil. Should tech-focused investors consider buying…

Read more »

Mature black woman at home texting on her cell phone while sitting on the couch
Investing Articles

Is the HSBC share price an absolute steal at today’s levels?

The HSBC share price has had a terrific run despite the recent sell-off. Now Harvey Jones wonders if the FTSE…

Read more »

Close-up image depicting a woman in her 70s taking British bank notes from her colourful leather wallet.
Investing Articles

Start investing in the stock market this May with under £1,000? Here’s how!

Christopher Ruane explains some basics of how a stock market newcomer could start investing with under £1,000 and no prior…

Read more »

Fans of Warren Buffett taking his photo
Investing Articles

Is this a ‘Warren Buffett moment’ in the markets?

Warren Buffett has been doling out wisdom to shareholders this weekend. Our writer puts one well-known Buffett adage into current…

Read more »

Young woman holding up three fingers
Investing Articles

3 stocks Fools bought over 10 years ago and still hold

The Motley Fool’s approach to investing prioritises buying and holding quality stocks for long periods of time.

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

8.1% yield! Here’s the dividend forecast for British American Tobacco shares through to 2027

British American Tobacco shares have been a prized commodity for investors seeking a large passive income. Are they a potential…

Read more »

House models and one with REIT - standing for real estate investment trust - written on it.
Investing Articles

1 FTSE 250 stock trading well below book value

Stephen Wright thinks investors have a number of attractive possibilities with a FTSE 250 REIT trading at a discount to…

Read more »