I think there are some great opportunities for investors looking for stocks to buy at the moment. If I had £1,000 to invest today, I’d be looking carefully at UK shares.
Understandably, the banking sector has been the subject of a lot of investor attention lately. But the two FTSE 100 stocks that stand out to me are in different sectors.
Ashtead Group
Buying shares in Ashtead Group (LSE:AHT) at the moment might not seem like the best idea. After being one of the best FTSE 100 stocks to own for five years, it fell 15% in March.
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Ashtead is an equipment rental business, which makes it highly cyclical. As such, if either the UK or the US enters a recession, there’s a risk profits could fall significantly.
This is exaggerated by the company’s high fixed costs, and investors will want to be aware of the company’s debt creeping up. So why on earth do I think this is a stock to buy?
Put simply, I’m taking the long-term view with this one. And when I look beyond the immediate future, I think things appear very positive.
Over the last five years, Ashtead has grown its revenues by 9% per year. And in the US – where 91% of its revenues come from – the company has plenty of room to expand further.
The business has also been moving into less cyclical areas. These include facilities maintenance, disaster recovery, and portable power.
Ashtead’s business might well be cyclical. But that also means that investor sentiment towards the stock is prone to fluctuations and I see the drop as a buying opportunity.
Rightmove
The other FTSE 100 stock I’d look to buy is Rightmove (LSE:RMV). The company’s shares have been fairly steady recently, but the share price is still down around 18% from where it was a year ago.
Chart
Rising interest rates might have been weighing on the Rightmove shares price – as they might for any stock. But there doesn’t seem to be much wrong with the underlying business, in my view.
Rightmove’s profits keep going up, its share count keeps coming down, and its market position remains dominant. Furthermore, it seems to be well-protected from the decline in the property market.
The biggest issue with the stock is probably that things might not go the way they have so far. Rightmove has just had a change in CEO, which is always a source of risk for a business.
It remains to be seen whether Johan Svanstrom can grow the business as effectively as Peter Brooks-Johnson did. And a price-to-earnings (P/E) ratio of 24 means there’s growth priced in.
In my view, Rightmove is one of the strongest companies in the FTSE 100. I own the stock in my portfolio and I’d look to buy it today despite the high valuation.
Investing £1,000
Exactly how I’d look to invest £1,000 today would depend on the balance of my portfolio. Since I already have a diversified portfolio, I’d probably concentrate on Ashtead with the full £1,000.
If I were getting started with my investing, though, and looking to build a portfolio from scratch, I’d invest £500 in Ashtead and £500 in Rightmove.
