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Two FTSE 100 stocks I think investors should consider buying are wise group (LSE: SGE) and Barratt Developments (LSE: BDEV). This is why!
wise group
Sage is a leading provider of enterprise software and the stock has been performing well for some time. I think they will continue this upward trajectory.
Over a 12 month period the shares rose 57%, from 745p this time last year, to current levels of 1,175p, as I write on Wednesday 20 December.
The annual results published last month for the year ending 30 September 2023 were excellent and showed me how well the business is doing despite macroeconomic volatility. Revenue and operating profit increased by 10% and 18% respectively. Furthermore, the company has an enviable track record of growing performance through acquisitions and organic measures as well. However, I understand that past performance is no guarantee of the future.
Buying some shares would increase passive income with a 1.7% dividend yield on offer too. It's worth remembering that dividends are never guaranteed.
From a risk perspective, Sage stock looks a little expensive at a price-to-earnings ratio of 36. Any bad news could send the stock tumbling. However, I firmly believe that sometimes you have to pay a good amount if you want to buy quality.
Finally, one aspect that I believe will help Sage stock and the business grow is the company's decision to continue incorporating artificial intelligence (ai) tools into its offering. This is a threat to the software company's future prospects, but it appears to already be adapting to the times.
Barratt Developments
Barratt Developments is one of the UK's largest housebuilders, and 2023 has been a bit wet for the company. Higher interest rates and rising costs have hampered business. However, in my opinion, the long-term outlook is fruitful.
As I write, Barratt shares are trading at 558p. This time last year they were trading at 394p, up 41% over a 12-month period.
Today's rising costs, which could continue to impact profit margins, are an ongoing risk that I will keep an eye on. After all, profits underpin returns as well as growth aspirations.
However, looking ahead, demand for housing is outpacing supply. Barratt can take advantage of this and increase performance and potential payouts. If interest rates start to fall and other volatilities dissipate, this could be good news for the company as completion and purchase numbers could increase.
Currently, Barratt shares appear to be excellent value for money with a price-to-earnings ratio of just eight. On top of this, the passive income opportunity seems too attractive to ignore, in my opinion. A dividend yield of over 6% is much higher than the FTSE 100 average of 3.9% and appears to be well covered by earnings.
In summary, while some short-term headwinds are possible, I think Barratt stock could be a great long-term buy and hold option for investors to consider.
