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UK investors have a variety of stocks to choose from FTSE 100. Growth stocks promise high returns, dividend stocks pay regular income and value stocks appreciate over time. And don't forget defensive stocks, to provide protection when the economy falters!
By building a well-balanced portfolio of diversified stocks, investors can reduce risk and aim for stable growth over time.
I am always looking for new and promising stocks to spice up my portfolio. So here are the three I plan to buy in October.
Growing up
I thought about 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 went up! This warning was due to very low spending in 2023 due to inflation.
Sports and fashion are both areas where consumers tend to cut back on spending when money is tight. Things are getting better now but another upset could hurt the company's profits again.
So with the price up 50% since February, now is the time to buy? Goldman Sachs thinks so – the retailer put a buy rating on the stock last month.
Its metrics look good too. The price-to-earnings (P/E) ratio is 15.4 and the price-to-sales (P/S) ratio is 0.8. It also trades 32% below fair value, based on future cash flow estimates.
All of that suggests strong growth potential, in my view.
Assignments
Rio Tinto's (LSE: RIO) UK-based mining conglomerate with operations in Africa and Australia. It's a 151-year-old company with a market-cap of £80bn, so it's well established. That makes it a more reliable choice for long-term benefits.
At 6.8%, it has the ninth highest yield in the FTSE 100. Dividends have grown at an average rate of 14.62% per year over the past 15 years.
But while the benefits look good, price growth could be at risk. With 60% of the company's revenue coming from China, a weak Asian economy there could hurt its profits. This has been noted by analysts, who forecast that earnings per share (EPS) will decline by 0.8% annually.
If that gets worse it could threaten future gains but, for now, it looks like a big payoff to me.
Self defense
AstraZeneca's (LSE: AZN) is the biggest company in Footsie with a market-cap of £185bn. The pharma giant has a very stable stock with little volatility during economic crises. It also has relatively slow growth, increasing at an annual rate of 5% per year since 2014. Both of these are common attributes of a defensive assignment.
Patent expiration is a common risk for pharmaceutical companies and can lead to loss of revenue. AstraZeneca has poured money into R&D to mitigate this risk but it remains.
In July, it posted mediocre Q2 results with a 13% increase in profits and a 6% increase in earnings. Earnings-per-share (EPS) came in slightly below analyst expectations and profit margins fell 1%. But as a defensive share, I don't expect dramatic growth from AstraZeneca – only that its stable price allows me calm and restful sleeping patterns.
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