I think the best stocks to buy at the moment are companies that could see rapid growth as the global economy recovers from the pandemic. As such, here are two FTSE 100 stocks I’d buy today with a lump sum investment of £3,000.
FTSE 100 stocks
The first company on my list the Premier Inn owner Whitbread (LSE: WTB). This corporation has faced some severe challenges over the past year.
The scale of those challenges were laid out in its second-quarter results. Total UK accommodation sales were down 61% in the quarter, with food and beverage total sales plummeting 86%.
But now that lockdown restrictions are starting to lift, the company’s outlook is improving. Indeed, it noted in its second-quarter update that the group has experienced “very strong forward booking trends in tourist locations throughout the summer.“
I think this could be a sign of things to come. After more than a year of being stuck at home, consumers are splashing out on holidays and trips. As one of the largest hotel operators in the country, Whitbread is almost certain to scoop up some of this additional business, in my opinion.
That said, the business continues to face challenges. Its central London and airport hotels are still reporting low levels of interest. That seems unlikely to change anytime soon.
Also, hospitality businesses have reported that they are struggling to find staff, which may mean companies like Premier Inn have to raise prices. This could have a knock-on effect on profit margins, holding back the group’s recovery.
Despite these risks and challenges, I’d buy the FTSE 100 stock for my recovery portfolio today.
The other company earmarked for my FTSE 100 recovery portfolio is the emerging markets-focused bank Standard Chartered (LSE: STAN).
Like Whitbread, the coronavirus outbreak slammed into the corporation last year, but the firm now seems to be on the mend.
The company’s profit attributable to shareholders increased 30% in the first quarter of 2020. The return on tangible equity, a key measure of banking profitability, was 10.8% for the period. It was 8.6% for the first quarter of 2020.
The company’s financial markets and wealth management business also reported its best-ever quarter off profitability.
I think these trends can continue as the global economy rebuilds. As business and investor confidence improves, demand for loans and wealth management products should increase.
The primary headwinds facing the enterprise are low-interest rates and competition in the wealth management sector. Both of these could hold back profit growth as the bank tries to compete with peers.
Even after taking these risks into account, I’m still a buyer of the stock. I think it has tremendous potential over the next five to 10 years if growth in emerging markets picks back up to pre-crisis levels, although this isn’t guaranteed.
The post 2 FTSE 100 stocks to buy with £3k appeared first on The Motley Fool UK.
Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Standard Chartered. 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.
Motley Fool UK 2021