With cash to deploy in my ISA now that the annual deadline has passed, I’m keen to buy some stocks for my portfolio. I’d like to buy some high-quality FTSE 100 shares that have significant long-term growth potential.
Here, I’m going to highlight two FTSE 100 shares that strike me as good buys right now. I think these stocks could be great picks for my ISA this year.
A Warren-Buffett style Footsie stock
The first FTSE 100 stock I want to highlight is Experian (LSE: EXPN). It’s one of the world’s largest providers of credit data. Its data allows banks and other financial institutions to make better lending decisions.
There are several reasons I see it as a great stock to buy. The first is that it’s a high-quality ‘Warren-Buffett-style’ company. Not only does it have a strong competitive advantage (a competitor can’t easily replicate its enormous data sets), but it’s also very profitable.
The second is that the company is shifting from simply selling data to data enhanced by decisioning tools. This should add value for customers. Highly-rated UK portfolio manager Nick Train, who owns the stock in some of his portfolios (and has been buying more shares recently), believes the decisioning tools will help drive substantial growth over the next decade.
One major risk here is that the stock could get caught up in another tech sell-off. I expect this year to be volatile for tech shares due to the fact that central banks are raising interest rates.
With the stock currently trading on a forward-looking P/E of around 28, however, I think the risk/reward proposition here is compelling.
It’s worth noting that analysts at Liberum just initiated coverage of the stock with a ‘buy’ rating and a price target of 3,700p – implying upside of about 25%.
One of the most profitable companies in the FTSE 100
The second FTSE 100 stock I want to discuss is Rightmove (LSE: RMV). It owns the UK’s largest property website.
Like Experian, Rightmove is a high-quality business. Today, it’s the leader in the UK property portal space by a wide margin (88% market share in 2021). This market dominance gives it a strong competitive advantage.
Meanwhile, the company is ridiculously profitable. Last year, the group generated a return on capital employed (ROCE) of 283%. That’s about 20 times the average FTSE 100 ROCE.
While Rightmove experienced some challenges during the pandemic, it has made a good recovery. For 2021, revenue came in at £305m, up 48% on 2020 and up 5% on 2019. Looking ahead, analysts expect the group to generate revenue of £330m for 2022.
Of course, if rising interest rates were to cause a huge slowdown in the UK property market, RMV could be impacted. This is a risk to consider.
Overall though, I see considerable investment appeal here. The stock currently trades at about 28 times this year’s forecast earnings, which I see as a very reasonable valuation.
