The year 2020 was challenging for investors holding FTSE 100 shares. But vaccines for Covid-19 present us with a path that could potentially allow the world to escape from the grip of the coronavirus pandemic. And on top of that, businesses have been finding ways to cope with the crisis and many have been trading well.
So, I’m not going to fall into the trap of underestimating the potential of world economies to recover. And I remain optimistic about the way human ingenuity will not only overcome the crisis but find ways to prosper in the years ahead too.
The best FTSE 100 shares I’d buy now
As such, I reckon it’s a great time to go shopping for shares. I’d look for businesses with the enduring potential to recover and grow. And there are several promising stocks within the FTSE 100 I’d aim to hold for several years.
Should you invest £1,000 in HSBC right now?
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For example, packaging and paper company Mondi looks well-placed in today’s world of online trading and parcel deliveries. I reckon the firm has the potential to increase its cash flow and dividends in the years ahead.
And for a top dividend yield just under 5%, I’d go for water and wastewater firm United Utilities. The sector is defensive and UU has a regulated monopoly position serving the North West of England.
Meanwhile, it’s been a few years since I last looked at telecommunications giant Vodafone. For a long time, the shares appeared to over-value the business. But since the beginning of 2018, a down-trend in the share price has made the stock look like good value again.
With the share price near 128p, the forward-looking dividend yield is north of 6% for the trading year to March 2022. And I think it’s worth having because Vodafone’s business has some defensive, cash-generating characteristics.
One of the prominent investing themes right now is the potential for beaten-down cyclical businesses to recover further as the pandemic fades. And I’d address that potential with shares like housebuilding company Barratt Developments and banking outfit Barclays.
Locking quality and growth into my portfolio
And the share price has been weak recently for the London-listed king of fast-moving consumer goods, Unilever. The company has some tasty quality metrics and almost always looks expensive. But I’d want the stock in my long-term portfolio and tend to see any weakness in the share price as a buying opportunity. So, I’d buy some shares now.
My final pick of the seven is catalyst systems supplier Johnson Matthey. City analysts have penciled in a rip-roaring 30%-plus recovery in earnings for the trading year to March 2022. And in the recent half-year results report, chief executive Robert MacLeod said he’s “excited” about the company’s medium-term growth prospects.
He reckons opportunities are arising for the business because of “accelerating global trends.” And Johnson Matthey is investing for its future and focusing on areas of business such as battery materials, fuel cells, and hydrogen production technologies.
