Yesterday (22 April) saw the FTSE 100 close at an all-time high of 8,023.87 points. That trumps its previous high of 8,012.53 in February 2023. I reckon now’s a good time for investors to go hunting for its best stocks.
I say that because I think we could see a sustained market rally in the months ahead. Interest rate cuts are imminent and investor sentiment is rising. As such, I want to get in before prices soar.
Here are two of the index’s finest stocks to consider buying today.
Diageo
I think one of the best quality companies the Footsie has to offer is Diageo (LSE: DGE). Yet despite it posting a slight gain in 2024, the stock’s taken a beating over the last 12 months.
Even so, that doesn’t worry me. A cheaper share price means investors can pick up a bargain. And the business stands out to me for a few reasons.
Firstly, it owns some of the industry’s most popular brands, such as Guinness and Captain Morgan rum. With that comes significant pricing power. That hedges it, to an extent, against tough macroeconomic conditions.
Secondly, its dividend yield has proved to be incredibly reliable. At 2.8%, it’s far from the highest on the Footsie. However, Diageo shareholders have seen their payout rise every year for nearly 40 years. That’s an impressive track record.
The drinks market is highly competitive and, given the cost-of-living crisis, some consumers have been cutting back on spending on its premium brands in favour of cheaper alternatives
Nevertheless, it has ambitious plans. By 2030, it’s aiming to grow its share of the global beverage alcohol market to 6%. For context, it was 4.7% in 2022. That’s a huge customer base for the business to tap into.
Marks and Spencer
I’d also consider Marks and Spencer (LSE: MKS). The high street stalwart has posted an epic turnaround in recent times.
It seemed as if the business was well and truly in the doldrums. But a shift in strategy that’s seen it get rid of underperforming stores, improve its product offer across multiple categories, and focus more on digital have led to its share price rocketing.
I think this will continue. Today, the stock trades on around 13 times earnings. That’s below the long-term Footsie average of 14-15. What’s more, it’s trading on just 10.2 times forward earnings.
The business has posted some impressive results in recent times. For the 26 weeks ended 30 September 2023, profit before tax rose to £325.6m, a 56.2% jump from the year before.
As such, JP Morgan recently lifted its target price for the stock to 330p. That represents a 26.7% rise from its current price. The broker also upgraded its rating to a ‘buy’ following the impressive market share gains the company has made.
Of course, we’re not out of the woods yet. While inflation is falling, any sign of a setback could lead to consumers tightening their belts.
But as rates are cut, this will provide an uplift in spending. I think Marks and Spencer’s well positioned to capitalise as it continues with its exciting turnaround.
The post The FTSE 100 reaches an all-time high! Here are 2 of its best stocks to consider buying appeared first on The Motley Fool UK.
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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo Plc. 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.
