It’s been a poor week for the FTSE 100, with the index falling around 2.5%. This was mainly due to fears of a slowdown in the economic recovery, especially as the Fed in the US announced that it could stop coronavirus stimulus measures before the year end, despite the large number of Delta variant cases. But I believe that this slight drop offers a good opportunity for me to buy FTSE 100 stocks. These are my top ones.
A telecoms giant
The BT (LSE: BT-A) share price has been on a downward slope since hitting highs of 205p at the end of June. Currently, it is priced at just over 170p. This fall has been caused by two major issues. First, there has been the general sell-off of FTSE 100 stocks, and this has had a negative effect on BT. Second, and more important, there have been fears about the competition facing the telecoms giant. Indeed, Virgin Media O2 recently announced that it will upgrade 14.3m homes to what the industry calls “fibre to the premises” by 2028. This is a quicker speed broadband that rivals what BT’s Openreach are also doing. As such, potential investors must consider this risk.
Nonetheless, I still feel that this dip offers a good time to buy BT shares, especially as there are many positives with the company right now. For example, Patrick Drahi, the founder of Altice, has recently taken a 12% stake in the business. Due to his previous experience in telecommunications, this is a great sign of confidence in the firm. It may also show that BT could become a takeover target for the future.
Further, the BT share price does look cheap. It currently trades at a price-to-earnings ratio of under 9, which is considered very cheap in comparison to other FTSE 100 stocks. It is also forecasting a dividend of 7.7p for the current fiscal year, equating to a dividend yield of 4.5%. These offer me compelling reasons to buy this stock, and I may do so at some point in the near future.
A FTSE 100 stock with a great presence in Asia
Burberry (LSE: BRBY) is another FTSE 100 stock that has fallen recently. In this case, it was due to the recent news that China is looking to “regulate excessively high incomes” and redistribute wealth in the country. This may have an adverse effect on Burberry, which generate a large majority of its revenues from the Asia-Pacific region via affluent consumers.
But I feel this dip makes it a good time to buy. Indeed, in the luxury goods maker’s recent first-quarter trading update, there were signs that it was making a full economic recovery. This was demonstrated by an 86% rise in revenues to £479m. The recovery was particularly strong in Asia, where sales were 7% higher than in the pre-pandemic quarter. In Europe, although sales were still adversely affected by the lack of tourism, store sales were still 146% higher than last year. This was because the majority had been able to open, albeit with some operating on reduced hours.
As such, while headwinds remain, I feel that Burberry is well-equipped to deal with them. Accordingly, I feel that this FTSE 100 stock could be an excellent addition to my portfolio.
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- BT share price: 3 reasons I would, and wouldn’t, buy the FTSE 100 share
- The BT share price has fallen: should I buy now?
- As the BT share price falls should I buy the stock?
Stuart Blair has no position in any of the shares mentioned. The Motley Fool UK has recommended Burberry. 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.