I’m always looking for FTSE 100 shares to buy for my portfolio. Right now, there are a handful of companies that really stand out to me as undervalued growth opportunities.
Here are three options, all of which I’d buy for my portfolio today.
FTSE 100 stocks
The first on my list is commodities trading house Glencore (LSE: GLEN). This company might not be suitable for all investors as it owns an extensive portfolio of coal mines and trades coal as well as oil and gas.
Despite this, I think the firm has enormous growth potential over the next few years. As the local economy recovers from the pandemic, government spending around the world is surging. This should drive higher demand for commodities such as copper and iron ore, and even coal. Glencore may benefit disproportionately from this as it’s the world’s largest commodities trading house.
Commodities trading is a low-margin market, where scale counts for everything. This is where the FTSE 100 group has the edge, and it’s the main reason why I believe it’s one of the best shares to buy now. As the economic recovery starts to gain traction, I’d buy the stock for my portfolio today.
Shares to buy for growth
Over the past two decades, Hargreaves Lansdown (LSE: HL) has grown from a challenger to one of the largest online stock brokers in the UK.
Looking at the company’s latest trading updates, it would appear this growth’s continuing. For the year to the end of June, the group added 233,000 active clients, taking the total number using the platform to 1,645,000. Total assets under administration increased to £136bn.
As the number of clients using the platform continues to grow, Hargreaves should continue to benefit from economies of scale. More users should generate more revenue, which will allow it to invest more money in growth, boosting customer numbers, and so on…
This growth potential’s the main reason I’d buy this FTSE 100 stock for my portfolio today. Challenges it may face as we advance include competition and additional regulations, both of which could hold back growth and weigh on profit margins.
Sugar-to-clothing group Associated British Foods (LSE: ABF) reaped the rewards of using a diversified business model last year. As revenues at its Primark value clothing business collapsed in the pandemic, volumes at its food and ingredients business surged.
As the economy reopens, the group is primed for expansion. While growth on the food side of the business has moderated over the past few months, its clothing business is expected to outperform. Like-for-like growth in the third quarter was 3% ahead of 2019 levels.
This diversification is the primary reason I believe ABF is one of the best shares to buy now. As the economy reopens, this FTSE 100 company may benefit from rising demand across all of its divisions.
I’d buy the stock, but I’ll also be keeping an eye on the risks that may hold back growth. These include rising commodity costs and higher wages, which could eat into profit margins across the business.
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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Associated British Foods and Hargreaves Lansdown. 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.