UK investors have a variety of shares to choose from on the FTSE 100. Growth shares promise high returns, dividend shares pay regular income and value shares appreciate over time. And don’t forget defensive shares, providing a buffer when the economy goes loopy!
By constructing a well-balanced portfolio of different shares, investors can reduce risk and aim for stable growth over time.
I’m always on the lookout for new and promising shares to spice up my portfolio. So here are three I plan to buy in October.
Growth
I considered buying JD Sports Fashion (LSE: JD.) shares earlier this year but decided against it. Soon after, the company issued a profit warning and the price spiralled! The warning was due to significantly lower spending in 2023 due to inflation.
Sports and fashion are both areas consumers tend to reduce spending on when money’s tight. Things are improving now but another upset could hurt the company’s profits again.
So with the price up by 50% since February, is now the time to buy? Goldman Sachs thinks so — the broker put in a Buy rating on the stock last month.
Its metrics look good too. The price-to-earnings (P/E) ratio’s 15.4 and the price-to-sales (P/S) ratio is 0.8. It’s also trading at 32% below fair value, based on future cash flow estimates.
That all suggests strong growth potential, in my opinion.
Dividends
Rio Tinto‘s (LSE: RIO) a UK-based mining conglomerate with operations in Africa and Australia. It’s a 151-year-old company with an £80bn market-cap, so it’s fairly well-established. That makes it a more reliable choice for long-term dividends.
At 6.8%, it has the ninth highest yield on the FTSE 100. Dividends have increased at an average rate of 14.62% a year for the past 15 years.
But while the dividends look good, price growth could be at risk. With 60% of the company’s revenue coming from China, the stifled Asian economy there could hurt its profits. This has been noted by analysts, who forecast earnings per share (EPS) to decline at a rate of 0.8% a year.
If that gets worse it could threaten future dividends but, for now, it looks like a great earner to me.
Defensive
AstraZeneca‘s (LSE: AZN) the largest company on the Footsie with a market-cap of £185bn. The pharma giant has a very stable price with minimal volatility during economic crises. It also has comparatively slow growth, increasing at an annualised rate of 5% a year since 2014. Those are both common attributes of a defensive share.
Patent expiry’s a common risk with pharmaceutical companies and can lead to revenue loss. AstraZeneca has poured money into R&D to mitigate this risk but it’s ever-present.
In July, it posted moderate Q2 results with a 13% increase in revenue and 6% earnings growth. Earnings-per-share (EPS) came in slightly below analyst expectations and profit margins fell by 1%. But as a defensive share, I don’t expect spectacular growth from AstraZeneca — only that its stable price allows me calm and restful sleep patterns.
The post 3 stunning FTSE 100 shares I plan to buy in October appeared first on The Motley Fool UK.
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
More reading
Are these the FTSE 100’s best value stocks?
A 7% yield and down 20%! £11,000 in this FTSE 100 dividend gem could make me £6,250 each year in passive income!
This UK stock looks pretty cheap to me
Should I rush to buy these FTSE 100 giants at 52-week lows?
Here’s how I’d aim for lifelong passive income by investing £200 a month
Mark Hartley has no position in any of the shares mentioned. The Motley Fool UK has recommended AstraZeneca 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.
