I’d avoid the BT share price and buy this FTSE 100 stock instead

In my opinion, the BT (LSE: BT-A) share price could be one of the most attractive investments in the FTSE 100 today. That’s if the company gets everything right over the next few years. I think there’s a 50/50 chance of this happening.

BT share price headwinds 

Historically, the company has been a pretty poor investment because the business has underinvested in its operations. Rather than deploying money to improve its telecommunications network across the UK, the organisation has spent billions of pounds on its pay-TV business, dividing the organisation.

By taking on larger competitors such as Sky and Amazon, BT has had to split its resources. This has allowed its competitors in the telecoms sector to take market share.

Therefore, rather than being really good at one thing, BT has become average at two. That’s not produced the best outcome for investors. Over the past five years, shares in the company have fallen nearly 70%, excluding dividends. 

However, BT now seems to have realised its past mistakes. The company has been investing in its network over the past two years, and investors seem to be noticing. The BT share price has increased in value by nearly a third over the past 12 months. 

If the company can continue on this track, I think the FTSE 100 stock could be a good investment. But that’s far from guaranteed. BT has an unrivalled telecoms network across the UK, which is a substantial competitive advantage. It’s also a household name. I think this gives the firm an edge over its competitors. By doubling down on these advantages, BT could have a bright future.

Nevertheless, I wouldn’t buy the stock today because I want to see more business progress first.  Therefore, I have been considering adding Burberry (LSE: BRBY) to my portfolio instead.

FTSE 100 growth 

Unlike BT which, in my opinion, has been trying to do too much, Burberry knows what it does best, and the business has not deviated from its strengths. By looking at the profitability of these two businesses, we can see how the different approaches have worked. Between 2015 and 2019, BT’s profit fell 22%. Burberry’s profit, on the other hand, increased by 1%. 

Granted, that doesn’t make Burberry the world’s fastest-growing business. It faces many of its own challenges. Fashion is a viciously competitive industry, and Burberry has paid the price by not staying on the top (although this is now starting to change). The group is also subject to economic conditions. Over the past year, its sales and profits have plunged as most of its stores have been forced to close. 

Still, compared to the BT share price, I think Burberry has a much brighter long-term outlook. By concentrating on what it does best, I think the FTSE 100 business can build on its existing strengths and ride the economic recovery over the next few years.