The FTSE 100 has a number of good stock opportunities for investors. But as Warren Buffett and Charlie Munger say, it’s important to focus on the very best investments.
So what is the best FTSE 100 stock to buy this month? I have two honourable mentions and an overall favourite.
Honourable mention: Rightmove
In my view, Rightmove (LSE:RMV) is a quality company trading at a decent price. I don’t think buying the company’s shares in June would be a bad idea at all.
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There’s clearly a lot to like about the business. Its balance sheet is strong, it has low capital requirements, and its size gives it an important advantage over competitors.
Furthermore, Rightmove shares are around 9% cheaper than they were at the start of May. I wouldn’t disagree with anyone who thought this was a decent investment opportunity.
A change in CEO brings a risk, but I think the company has a bright future. Exactly how much it can exploit opportunities for growth is an open question, but I expect it to do well.
I see Rightmove as a terrific business. The only reason this isn’t my top FTSE 100 stock to buy in June is that I believe there’s an are even better opportunity, more of which later.
Honourable mention: Rio Tinto
Shares in Rio Tinto (LSE:RIO) have fallen by around 16% over the last 12 months. The main reason is that the prices of the commodities it sells have been falling.
Demand has been strong though, resulting in inventory levels declining. This is reasonable with a recession looking likely, but I think it creates a buying opportunity.
A recession is a genuine risk for Rio Tinto, but what if it doesn’t happen? Manufacturing and construction in the UK are continuing to grow, which I see as positive for the company.
Moreover, even if a recession does come, a lot is priced into the stock already. So buying now with a view to profiting on the other side could be a good idea.
Like many mining companies, Rio Tinto rewards its shareholders with steady dividends. For investors looking for passive income, I think it could be a great investment at today’s prices.
Winner: Lloyds Banking Group
Both Rightmove and Rio Tinto look like good stocks to buy to me. But my top FTSE 100 stock to buy in June is Lloyds Banking Group (LSE:LLOY).
Bank stocks in general have been under pressure as the sector has been suffering from some uncertainty. But in the case of Lloyds, I view this as a positive thing.
When a sector goes through a crisis, it’s often the case that the companies with the best balance sheets come out stronger than they went in. With UK banks, this means Lloyds.
In the US, the big banks have seen deposit inflows as smaller competitors struggle to hold on to their customers. And I expect to see something similar in the UK.
The possibility of additional regulation is a genuine risk. But with the stock at its lowest levels since the start of the year, Lloyds is the FTSE 100 stock I’d buy if I had cash to invest in June.
