I think these FTSE 100 shares are perfect buys during this tough period for the global economy.
Endeavour Mining
Investing in gold is still the classic flight-to-safety play when times get tough. But buying physical gold or an exchange-traded fund (ETF) that tracks the gold price may not be the most effective way to do this.
Should you invest £1,000 in Abrdn 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 Abrdn made the list?
This is because gold itself (or a linked financial instrument) only provides a positive return when the metal price increases. Conversely, buying a UK gold-mining stock can provide a passive income as well as capital gains.
I think Endeavour Mining (LSE:EDV) could be a great way for investors to get the best of both worlds. Today the company offers a juicy 3.2% dividend yield for 2023.
Buying a stake in any commodities-producing business is riskier than an ETF or physical metal. Problems at the exploration, mine development, or production stages can be common. But the quality of Endeavour’s assets still makes it a top buy in my book. Its network of mines stretches across East Africa, too, and this helps to reduce risk.
Finally, the FTSE 100 firm is able to haul the shiny metal from the ground at a much lower cost than rival miners. All-in costs came in at $1,022 per ounce in quarter one, well below the average gold price of $1,886 during the period. This allows it to generate particularly impressive profits.
I’m confident that gold prices will soon soar past $2,000 per ounce, too. Stubbornly high inflation, weak economic data from across the world, and constant geopolitical tensions could all thrust the safe-haven metal higher.
B&M European Value Retail
Investing in UK retail shares can be incredibly risky during this cost-of-living crisis. Latest data from accountancy firm BDO showed like-for-like retail sales drop 1.5% in May.
This was the first drop in more than two years and illustrates the growing strain on shoppers’ budgets. As the UK economy cools and interest rates continue rising, the amount spent on both essentials and discretionary items could keep sinking.
Research provider Retail Economics recently commented that “consumers are reassessing their relationships with retailers and brands” and that “shoppers are trading off quality, experience and convenience in exchange for lower costs”.
I’d buy shares in B&M European Value Retail (LSE:BME) to build wealth in this climate. Revenues here rose 6.6% in the 12 months to March (to £5bn) and have kept climbing in the weeks following the end of the period. The company is steadily expanding its store estate so it can grow earnings when market conditions normalise, too.
Higher costs are putting the squeeze on earnings. But margins are still higher than they were pre-pandemic (at 11.5% for financial 2023 on an adjusted EBITDA basis versus 9% three years earlier). And as the business improves its supply chains there is room for further healthy growth.
