I’m investing £500 in these 2 FTSE 100 hidden gems!

Andrew Woods offers his thoughts on two lesser-known FTSE 100 companies, and why he’s investing £500 in them.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Woman using laptop and working from home

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The FTSE 100 is full of interesting and exciting companies. Some are instantly recognisable, and others aren’t as well-known. I’ve got £500 to use to buy stocks, and I think I’ve found two of the hidden gems of the index to add to my portfolio. Let’s take a closer look. 

A growing business

The first business I’m focusing on is asset manager Schroders (LSE:SDR). In the past three months, the shares are down 12.6% and are currently trading at 2,640p.

Created with Highcharts 11.4.3Schroders Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

For the six months to 30 June, the firm’s assets under management (AuM) grew by 1% to £773bn. 

Should you invest £1,000 in Barratt Developments right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Barratt Developments made the list?

See the 6 stocks

This is positive news, especially given that rival companies have reported dwindling AuM figures. Ashmore, for instance, saw its AuM decline heavily in the first half of 2022. 

Also, for the same period, Schroders reported that operating profit increased by 2%, although pre-tax profit fell by 16%. This is likely the result of inflation, which is beginning to eat into the firm’s balance sheet

While many companies are suffering from inflation-related problems at the moment, I’d like to see pre-tax profits rise in coming quarterly reports.

Investment bank Credit Suisse recently upgraded the business, stating that it was trading at a “deep discount” and boasts a diverse portfolio.

It’s also in a good state of financial health, with cash of $5.09bn dwarfing its total debt of $373.5m. This should ensure that it can weather any storms that come its way in the short term.

Room for improvement?

Second, Premier Inn owner Whitbread (LSE:WTB) has seen its share price fall 9.55% over the last three months. At the time of writing, the shares are trading at 2,532p.

Created with Highcharts 11.4.3Whitbread Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

The firm was battered by the pandemic, which forced its hotels and restaurants to close for many months at a time. For the year ended February 2021, the company slumped to a £1bn pre-tax loss.

Threats remain, however, in the form of cost inflation.

Despite this, for the three months to 31 March, the business stated that it was seeing a continued rebound in demand after the pandemic. 

UK accommodation sales surged over 200%, compared to the same period in 2021. Furthermore, they remained over 21% higher than 2019 levels. 

As a potential shareholder, it was promising to read that total group sales were over 286% greater than the same period in 2021. While the firm definitely isn’t out of the woods yet, it’s clear that a recovery is in progress.

Overall, both of these lesser-known companies appear to be running smoothly. While both have suffered in recent years, they look to be recovering at a swift pace. Investing in both also gives me the chance to diversify my own portfolio. As such, I’ll use my £500 to buy shares in the two businesses soon. 

Pound coins for sale — 31 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Andrew Woods has positions in Ashmore Group. The Motley Fool UK has recommended Schroders (Non-Voting). 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.

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Investing Articles

Here’s why the B&M share price just jumped 5%

The B&M share price has had a tough 12 months. But the latest upbeat year-end trading update makes me think…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

Making these moves in an ISA now could pay off in 5 years

Investing in an ISA now, while shares prices are low, could look like a brilliant move in five years’ time,…

Read more »

Warm summer evening outside waterfront pubs and restaurants at the popular seaside resort town of Weymouth, Dorset.
Investing Articles

As tariffs create uncertainty, this legendary FTSE 100 stock is rising

This under-the-radar FTSE 100 stock just hit a new 52-week high, despite all the uncertainty in the global economy at…

Read more »

Investing For Beginners

Is this the end of the FTSE 100 market rout? 3 things I’m watching like a hawk

Jon Smith looks to assets such as the US dollar and gold for signs of whether or not the FTSE…

Read more »

Investing Articles

The Shell share price is down 16% in April and looks a bargain to me

The Shell share price may have tanked in the recent market sell-off, but Andrew Mackie explains why he remains bullish…

Read more »

Young Asian man shopping in a supermarket
Investing Articles

Down 15%! Should I snap up Tesco shares for a second income?

This investor is open to adding another FTSE 100 dividend stock to his portfolio to build up a second income.…

Read more »

Investing Articles

Hunting for an enticing entry point? 3 US stocks to key an eye on

As financial markets remain turbulent, savvy investors are hunting for opportunities in the chaos. I have quite an extensive watchlist…

Read more »

Investing Articles

Is it still a good time to buy shares?

With the US announcing smartphones, computers, and semiconductors from China are exempt from certain tariffs, is it safe to buy…

Read more »