The New Year is upon us. As such, I’m scanning the FTSE 100 for shares that I’d buy in 2024.
The index is full to the brim with some of the highest-quality and best-known companies in the UK. When it comes to selecting stocks, I think the Footsie is one of the best places to look.
But of the 100 constituents, it’s difficult to pinpoint which shares will prove to be the most profitable investment. That said, I’ve found two I have my eye on.
Barclays
It’s not been the greatest of years for Barclays (LSE: BARC). During 2023, it’s seen its share price take a hit. However, I see now as a savvy time to buy in.
I’m a big fan of investing in out-of-favour FTSE 100 shares. I plan to snap them up and hold them for the years and decades ahead. For that reason, I’m drawn to Barclays given its low valuation. At the time of writing, it trades on just four times earnings. Further, its price-to-book ratio, which measures a stock’s price relative to the value of its assets, is just 0.3. I’m also a fan of Barclays due to its dividend yield, which sits at 5.3%.
The main factor that will dictate the Barclays share price in the foreseeable future is interest rates. On the one hand, falling rates will provide a boost for the firm. Lower rates mean a revival in investor sentiment. For Barclays, this translates to a higher share price.
However, rates declining also harm the bank’s net interest margin. We’ve already seen this in action. In October, it downgraded its full-year guidance to between 3.05% and 3.1% from a previous 3.15%. The stock fell 7% off the back of the news.
Regardless, I’m still bullish. Barclays shares look too cheap to pass on. I’m keen to top up my position in the weeks ahead.
Unilever
I’m also paying close attention to Unilever (LSE: ULVR). The stock has flirted with its 52-week low in 2023. But I’m hoping 2024 will be more positive.
At the moment, it trades on 13 times its earnings, which I think is reasonably priced. Despite a tough economic environment, management is forecasting 3%-5% annual sales growth for this year.
Of course, that’s just a prediction and it may not be met. The biggest challenge for the business going forward will continue to be inflation. While Unilever has increased prices to protect its margins, sales volume has fallen. Should prices remain high, customers may decide to opt for cheaper alternatives.
However, I like the defensive nature of Unilever. The products it provides are essential. That protects its bottom line to an extent against a tough economic backdrop.
With that, it’s also looking to invest in its existing brands as opposed to acquiring new ones. I think this is a smart move. After all, it’ll stop Unilever from potentially overpaying for other companies, as its shareholders believed it nearly did with Haleon.
As a defensive stock with a fairly low valuation, I think Unilever presents a unique opportunity. I’m strongly considering opening a position.
