The FTSE 100 has had an incredible November, and I reckon December could also be a good month for large-cap UK shares. There’s the potential for the usual Santa Rally and this year that could be made more likely with a Brexit deal (which it seems everyone wants now) alongside further positive vaccine news.
It feels like there’s no time like the present to be tucking into a large helping of shares in the UK’s biggest companies.
A FTSE 100 share I’ll be buying more of
The FTSE 100 company I’m most likely to invest in during the coming month is Diageo (LSE: DGE). I already own shares in the global beverages giant. Why? It’s because I think it’s a quality business that if I hold for the long term will compound and add significant value to my SIPP. I’m reassured that fund manager Nick Train, who is well known for buying and holding quality companies, is positive on Diageo.
Indeed, he has said: “Diageo is the best collection of alcoholic beverage brands in one company that exists anywhere in the world.
Diageo shares today are down something like a quarter from their peak. That’s an incredible opportunity to invest in brands of the calibre of Guinness, Johnnie Walker or Tanqueray, because those brands are going to be around not just next year, but in fact, probably in 50 years.”
Diageo has delivered an 11.5% annualised total return over the past 10 years, according to SharePad. This slow and steady growth at a cheaper price as a result of the pandemic makes it an ideal share to buy this month, in my view. Indeed, I’ll very likely add to my holding and enjoy a tipple from one – or many – of its brands.
Another share that might get investors excited
Continuing with the theme of buying quality companies, Experian (LSE: EPN) is another FTSE 100 share that could continue to do well. It’s another share that Nick Train has bought. He expects that rising demand for Experian’s advanced analytics and data management tools will drive strong growth.
The company faces some headaches in the UK around data usage for marketing and the last set of results weren’t as warmly received as usual. However, I think these temporary setbacks provide a potentially attractive entry point into the shares. The share price is still up this year, not something most other FTSE 100 companies can point to.
You might think at first glance of Experian as quite expensive. It has a trailing price-to-earnings ratio of around 34, following the recent share price fall. And compared to other data businesses, it’s not actually that expensive. In some ways, it resembles a growth at a reasonable price type of share, which can be very profitable.
It’s not a hidden gem of a FTSE 100 share, that’s for sure, but if you hold for a long time the price to buy might be worth paying. It looks to have plenty of opportunities to grow. I’d be prepared to buy it now and hold it for the long term.