With July nearly over, I’m now on the lookout for the best FTSE 100 stocks to buy in August. I’ve found two companies that I think have strong growth potential and I’m taking a closer look to see if I want to add them to my portfolio.
Banking on higher interest rates
Barclays (LSE:BARC) is banking giant. Over the past year, its share price is down just 4.5%. But in the past week, the shares are up 8.5% and they currently trade at 160p.Â
There are strong expectations that the Bank of England will increase interest rates next month. With a Monetary Policy Meeting scheduled for 4 August, many are forecasting that rates could climb by 0.5%.
This would mean that interest rates rise from 1.25% to as much as 1.75%. This is critical for Barclays, because it determines how much banks can charge customers who want to borrow money.
However, more expensive borrowing may deter potential customers from taking on any more debt as the cost-of-living crisis rages.
For the three months to 31 March, the business beat forecasts, registering a pre-tax profit of £2.23bn. This was ahead of expectations that stood at £1.32bn. It’s important to emphasise, however, that past profitability in no way guarantees future profitability.
Furthermore, the firm is embarking on a £1bn share buyback scheme. This is an indication that the company is in a strong financial position.
A home from home
Rightmove (LSE:RMV) shares have fallen 5.8% in the past year, but they’re up 11.8% in the last month. At the time of writing, they’re trading at 626p.
During the pandemic, in 2020, the online portal for home-hunters saw a fall in pre-tax profit to £134m. In 2019, this figure stood at £213m. By 2021, however, this had recovered to £225m.
Furthermore, the company hiked its dividend to 7.8p, from 4.5p in 2020. This was due to a higher number of housing transactions in 2021, up 41% from the previous year. It’s important to note, however, that dividend policies may be subject to change at any time.
Despite this, the business is unsure about the impact of inflation and the cost-of-living crisis. Both of these issues could impact the housing market and, by extension, the Rightmove share price.
It expects further growth in online property advertising in the UK. In 2021, for instance, revenue from advertising increased 53% year on year.
Overall, these firms could be set for further growth in their respective sectors. Next month could be a good time to add these companies to my portfolio, given that interest rates may be about to rise. The UK property markets also appears to be going from strength to strength, so I will buy the shares of both businesses and hold them for the long term.