With May’s salary in and the bank holiday celebrations out of the way, I have around £1,000 available to invest in stocks. I’m happy to wait for opportunities to come along, but there are some FTSE 100 stocks that I’m thinking of adding to my portfolio at the moment.
Endeavour Mining
The first stock on my list is Endeavour Mining (LSE:EDV). The company owns and operates gold mines across Africa.
In my view, Endeavour has some of the best assets around. Its quality assets allow Endeavour to extract gold at lower prices than its competitors, boosting profitability.
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By my calculations, Endeavour’s average cost of production is around $887 per ounce. This means that it can remain profitable even if the gold price declines significantly from its current level around $1,800/oz.
The main risk with the stock is that Endeavour’s operations are in countries that can be politically unstable. But I think that this risk is more than adequately compensated for by the the low operational cost of the company’s mines.
InterContinental Hotels Group
I like businesses that produce strong returns using little (relatively speaking) in the way of fixed assets. And I think that InterContinental Hotels Group (LSE:IHG) fits the bill through a mixed business model that includes franchising.
Based on its most recent financial statements, the company has $411m in fixed assets and it uses this to generate $506m in operating income. I think that’s a strong return and that’s why I’m looking at buying shares as the summer holiday season begins.
The share price has been relatively static over the last year or so, but the company’s shares aren’t cheap at the moment. In my view, the biggest risk with this investment is overpaying, but I think that the quality of the business is enough to justify the price tag.
Experian
Lastly, I’m looking at Experian (LSE:EXPN). Unlike InterContinental Hotels, the stock has fallen significantly since the beginning of the year and it’s now reached a level at which I’d like to invest in it during June.
In my view, Experian has one of the strongest competitive positions of any company in the FTSE 100. It’s one of the three major credit bureaux, but its services complement — rather than compete with — the services of its competitors.
The risk with Experian, in my view, comes from the current macroeconomic situation. As interest rates rise and lending slows down, demand for Experian’s services might start to decline.
I think, however, that pessimism over the economic outlook is a buying opportunity. Over time, I take the view that the company’s strong competitive position and impressive ability to generate cash can prevail.
Which will I buy?
So here I am with my £1,000 ready to invest and a choice between Endeavour, InterContinental and Experian. While I like all three investment opportunities, I think the best of them at the moment is… Experian. But I’m not rejecting the others out of hand.
As a result, I’m looking at investing around £600 in Experian shares. I’ll possibly divide the remaining £400 between the other two stocks, with £300 for Endeavour and £100 for InterContinental.
