As the FTSE 100 has rallied to new highs, I’ve been looking for blue-chip growth stocks to add to my portfolio. I’m looking for companies that I can buy and hold for the next five to 10 years.
And with that in mind, here are two FTSE 100 companies that I would buy, which I believe meet these criteria.
FTSE 100 growth
The first company on my list is Melrose Industries (LSE: MRO).
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Some analysts believe the world could be heading for a mini economic boom over the next few years. Massive stimulus plans unleashed by governments worldwide to rekindle economic growth following the pandemic have already sparked a rush in demand for essential commodities such as copper and iron ore. Sectors such as manufacturing are also registering rising orders.
Melrose owns British engineering group GKN, among other businesses, and could benefit substantially from this trend.
The company buys and develops struggling engineering businesses, and it has an excellent track record of completing successful deals. It is currently trying to offload Nortek Air Management, a firm acquired several years ago.
Management is planning to use the proceeds for another deal. After the pandemic, there are plenty of options. It’s this ‘buy, build and sell’ strategy that gets me excited about the long-term potential of this business.
Of course, just because the company has succeeded in this strategy in the past does not mean that the run of good luck will continue. A bad deal could cause the group some severe issues. If funded with debt, it could even force the enterprise into bankruptcy in a worst-case scenario. I think this is the most considerable risk facing Melrose right now.
Still, I would buy this FTSE 100 stock as a way to invest in the global economic recovery.
Data is vital
The other FTSE 100 stock I would buy as a long-term growth investment is data business Experian (LSE: EXPN).
This company specialises in gathering and distributing consumer financial data. I think the demand for these kinds of services will only increase as the world becomes more digital.
And as Experian has more data than virtually any other business in the space, I believe it has a tremendous competitive advantage. This advantage may work in the group’s favour for many years to come.
However, this advantage is also a risk. If the company suffers a data breach, it could face significant fines from regulators. Such a development would also damage its reputation with customers. This would likely have a dramatic impact on its ability to gather, store, and analyse data. In the worst-case scenario, it could lose its competitive advantage altogether.
While keeping these risks in mind, I would buy the FTSE 100 growth stock for my portfolio today. Considering its long-term growth potential, I think the business’s opportunities far outweigh the potential challenges it could face.
