This month, I’m considering three FTSE 100 stocks that I think could be great long-term investments.

The UK’s most popular dividend stock?

Lloyds Banking Group (LSE: LLOY) is firing on all cylinders. The bank says its revenue rose 13% to £4.6bn during the third quarter, mainly due to higher interest income.

Rising interest rates could provide a big boost to bank profits, but they also bring a couple of new risks. If bank profits soar while many people are struggling to pay their bills, the government might introduce a windfall tax.

The second risk is that rising rates could trigger a sharp rise in bad debt. Lloyds is the UK’s largest mortgage lender, so it’s exposed to the risk of rising arrears when homeowners are forced onto higher rates.

Lloyds says it hasn’t seen any sign of rising bad debts yet. However, the bank has already accounted for £1bn of expected future losses this year, in recognition of this risk.

A UK recession could hit Lloyds’ profits. But the bank’s balance sheet looks strong to me, and I think the 6% dividend yield looks very safe.

A family-owned business I’d buy

Food and fashion group Associated British Foods (LSE: ABF) owns brands including Primark, Twinings and Kingsmill. The last couple of years have been tough, especially for Primark, which doesn’t sell online.

Profits are still well below the peak levels seen in 2017/18. But ABF went into the pandemic with plenty of cash and minimal debt. This strong financial position has allowed the family-controlled group to orchestrate a strong, planned recovery.

Short-term risks remain. Primark is only just starting to experiment online, but rather from a click & collect perspective than selling direct. High commodity costs and supply chain problem could also continue to cause disruption.

However, I admire the long-term focus of this business, which is still run and controlled by the founding Weston family. ABF shares currently trade in line with their book value, on just 10 times forecast earnings. I reckon the stock looks good value at this level.

An overlooked FTSE 100 stock?

My final pick is FTSE 100 cement and aggregates group CRH (LSE: CRH). This business operates throughout Europe and North America. Its UK operations include building materials company Tarmac.

I’ve tended to overlook CRH over the years. But with the shares down 25% so far this year, I’m starting to think this business could be a good long-term buy.

CRH’s products are essential to many industries, while the company’s size is allowing it to invest in cutting carbon emissions and becoming more sustainable.

This FTSE 100 stock looks reasonably priced to me, with a price-to-earnings ratio of 10. But I think the main risk is that it’s still too early to buy. If the global economy continues to slow, CRH’s earnings (and share price) could fall.

What I’m doing

I’m currently waiting for some cash to arrive in my portfolio from a takeover bid for one of my existing stocks. Until then, I plan to continue researching these stocks.

I think they all have the potential to be good long-term investments at today’s prices.

Strong operating cash flow

The first company I’m looking at is Associated British Foods (LSE:ABF). The business – a food and ingredients specialist and fashion retailer – has seen its share price fall 20% in the past three months. At the time of writing, it’s trading at 1,279p.

An interesting aspect of the company is its dividend policy. For the year ended September 2021, it paid 40.5p per share. This equates to a yield of around 1.61% at current levels. While this isn’t the highest on the market, it’s still competitive.

Dividend policies may be subject to change in the future.

The firm recently released its full-year expectations for the year ended September 2022. It forecasts that revenue will be “well ahead” of last year’s results.

In addition, adjusted operating profit may be higher than last year, while its fashion retail chain Primark could have year-on-year sales growth of 40%.

However, operating profit and earnings per share (EPS) are expected to fall in the coming year. This is largely due to inflation and supply chain issues.  

Despite this, the business has operating cash flow of £2.03bn, meaning that it should be able to navigate through any short-term problems that arise.

Surging profits

Second, I’m drawn to Glencore (LSE:GLEN). In the past three months, the shares have climbed 14% and currently trade at 494p.

The mining firm also has an attractive dividend yield of 4.39%. Last year it paid $0.26 per share. 

The business has benefited from elevated commodity prices over the last couple of years. Much of this has been caused by the economic reopening following the pandemic.

For the six months to 30 June, interim core profit increased by $10.3bn. Furthermore, the company will return $4.5bn to shareholders through a share buyback scheme and a special distribution. It’s good to know that I could gain income in addition to dividend payments.

There is, however, the real threat posed by supply chain issues. In addition, a recession may lead to a downturn in demand for many of the commodities that Glencore produces.

Despite this, the firm is still a major player in the liquefied natural gas (LNG) market. It’s widely expected that the price of LNG will continue to rise as demand increases through the winter. This could be good news for Glencore.

Overall, both companies offer growth prospects and a potentially stable income stream. With these things in mind, I’ll be adding both businesses to my portfolio soon as I steadily rebuild my cash reserves.

It’s during such times that savvy investors hunt down stocks where there has been unwarranted carnage. In doing so, however, it’s imperative to avoid a bull trap.

We’ve already seen many mega cap tech stocks in the US recover from their June lows. But for me, this is the sign of a classic bear market rally and I still see significant downside risk here.

Retail in the doldrums

In the bloodbath, one stock has really caught my eye, Associated British Foods (LSE: ABF). Its share price is now trading at levels not seen since 2012.

ABF does face some significant challenges. Last month, its retail division issued a profit warning. True, total sales at the Primark chain are expected to be 40% higher than last year. But that’s mostly due to the fact that all its stores are now open and trading as normal.

On a like-for-like basis, sales this quarter are expected to be 9% below pre-Covid levels. Comparable sales across Europe should fall behind by as much as 18%.

To protect its cost-conscious brand image, Primark has decided not to implement any further price increases. Consequently, operating profit margin in 2023 is expected to be below the 8% projected for the second half of this financial year.

Diversification is key

However, ABF is a lot more than just Primark. Some 60% of its revenues comes from a diversified group of businesses, including grocery, sugar, agriculture and ingredients. Many of these have been thriving in an inflationary environment.

AB Sugar is one of the largest sugar producers in the world. Revenues at this division are significantly ahead of last year, driven by soaring sugar prices.

Of course, like many commodities, sugar prices have come down recently. However, I still believe the fundamentals are good for this sector, particularly with supply side constraints still evident. Indeed, ABF is predicting European sugar demand will remain in excess of production for some time.

It’s a similar story in its grocery division where increased prices should drive revenue growth. Many of its brands are household names, not only in the UK, but across the globe. These include Twinings, Ovaltine, and Silver Spoon.

Keep it in the family

Over half the issued share capital of ABF is owned by the Weston family. The business is on the whole conservatively run with a history of prudent financial management. This, I believe, is a source of strength in the present economic environment.

ABF is a strong, well-capitalised company with net cash of £1.5bn. This financial strength has enabled Primark to advance the inventory purchase of its winter stock in anticipation of supply chain bottlenecks. Primark has also recently launched a new website and is to launch a trial for click-and-collect.

With a proven business model and excellent long-term growth potential across its businesses, I view ABF as a no-brainer buy. That is why, over the last few weeks, I’ve been adding to my position here.

[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]

Greggs 

What it does: Greggs makes and sells sweet and savoury foods through more than 2,000 stores across the UK.

By Royston Wild. Morning-goods retailer Greggs (LSE: GRG) might not be suitable for risk-averse investors. Even food specialists are suffering from weakening demand during the cost-of-living crisis. At the same time, worsening inflation is putting growing pressure on the baker’s bottom line. 

Having said that, I think it has the tools to continue growing earnings even as recession approaches. So do City analysts, who think the business will report earnings rises of 1% and 4% in 2022 and 2023 respectively. 

Sausage rolls, coffee, doughnuts, and the other goods Greggs is famous for sell well at all points of the economic cycle. What’s more, the bakery chain sells its products at low price points, giving its revenues column extra resilience when consumers feel the pinch. 

This is why like-for-like sales rocketed 22.4% during the first six months of 2022. I’m expecting another impressive report when third-quarter trading numbers are released on Tuesday, 4 October. This could give the Greggs share price a lift following recent heavy weakness. 

Royston Wild does not own shares in Greggs. 

Associated British Foods

What it does: Associated British Foods is a diversified collection of businesses that includes retail, grocery, sugar and agriculture.

By Andrew Mackie: In a worsening economic environment, it might seem strange that I would choose a company whose revenue is so heavily reliant on retail. However, with Associated British Foods (LSE: ABF) share price languishing at a 10-year low, I believe the market is missing a trick here.

UK sales at Primark have been performing well and are nearly back to pre-Covid levels. However, the same cannot be said across continental Europe where like-for-like sales are down 18%. As the cost-of-living crisis intensifies, ABF is starting to see signs of a consumer spending slow down across all markets.

Whilst retail is struggling, other parts of the business are thriving. Surging sugar prices has meant that revenues are well ahead of last year. In addition, UK sugar production is up 14%. It’s a similar story in grocery, which is benefiting from price increases across a range of branded products.

ABF’s share price is now trading 17% lower than during the pandemic. That is despite all its Primark stores being open, a successful launch of its UK website earlier in the year and an expected Christmas launch of a trial click and collect.

Opportunities to pick up cheap shares in high-quality companies with proven business models don’t come along very often. The fact that ABF is a family-run business provides me with added reassurance. That is why I have been buying more of its shares recently.

Andrew Mackie owns shares in Associated British Foods.

IG Group

What it does:  IG Group Holdings is a UK-based financial technology company providing an online platform for traders.

By Paul Summers: Given concerns over rapidly rising interest rates and a prolonged recession, I suspect global markets could remain choppy for a while. Should this be the case, spread-betting supremo IG Group (LSE: IGG) might be a great place to park my cash. 

In contrast to most listed companies, this high-quality outfit actually benefits from volatility. This may be one reason why the share price has held up fairly well (albeit still down) over 2022.   

While never guaranteed, the dividend stream also looks enticing. IG shares currently boast a forecast yield of 6%. As inflation continues to bite, that’s worth grabbing in my opinion.

Sure, there are risks here. The industry it operates in is often targeted by regulators. Competition for clients also remains fierce.

With sky-high margins and a robust balance sheet, however, I can think of a lot worse places to be invested in these tricky times.

Paul Summers has no position in IG Group

B&M European Value Retail

What it does: B&M is a leading staple & discretionary discount retailer with over 1,100 stores across the UK and France.

By Zaven Boyrazian. B&M European Value Retail (LSE:BME) is one of the UK’s leading discount retailers for both staple and discretionary items. The group operates 1,016 stores across the country under the B&M and Heron Foods brands, with a further 109 locations popping up in France.

Lately, the tailwinds from the pandemic have started dying down, causing revenue growth to seemingly stagnate. Unsurprisingly, its share price has followed, falling by a massive 50% courtesy of the stock market volatility.

However, as consumers seek to cut spending, the popularity of discount retailers is rising. And suppose the worst comes to pass and the UK falls into a recession. This could create ample opportunities for B&M to steal market share from its larger competitors.

Being a discount retailer obviously means that pricing power is basically non-existent. But with positive trends already emerging in its latest results, paired with a P/E ratio of 7.6 and a dividend yield of 5.2%, I believe Now could be an excellent buying opportunity for my stocks and shares portfolio.

Zaven Boyrazian does not own shares in B&M European Value Retail.

Greggs

What it does: With around 2,300 outlets, Greggs is the UK’s leading fast food chain. It focuses primarily on baked goods.

By Stephen Wright. In an uncertain economic environment, I’m looking for something stable. That’s why Greggs is my Best British share to buy in October.

Peter Lynch famously said that his initial interest in Dunkin Donuts came from seeing the constant queues outside – even in a recession. I feel the same way about Greggs.

From what I can see, the current cost-of-living crisis appears to be making no difference to this company. It’s easy enough to see why. 

The company’s products are familiar and inexpensive. This means that they’re less likely to get cut from the budgets of price-conscious consumers.

At a price-to-earnings (P/E) ratio of under 16, I don’t think that the stock is particularly expensive. The company also generates solid returns on equity.

There’s a 3% dividend for investors looking for passive income and the company plans to expand to 3,000 stores in the future. I’d be willing to buy shares for my portfolio at today’s prices.

Stephen Wright does not own shares in Greggs.

BT 

What it does: BT is a UK-based telecommunications company with operations in over 180 countries.

By Charlie Keough. My top British stock for October is BT (LSE: BT-A). The BT share price has failed to take off in the last five years. And this decline has continued into 2022 due to inflationary pressures. However, I think its shares could be a strong long-term buy.  

Firstly, its attractive 5.7% dividend yield is a great way for me to put my money to work at a time when stagnant cash is losing value.  

Further, I like the large infrastructure that BT already has in place. This provides the firm with, to some extent, a higher degree of pricing power. It’s also on track with its Openreach rollout, while its 5G network now covers more than half of the UK.  

What does concern me is its £19bn of debt. With interest rates rising, this will only become more difficult to eradicate. 

However, I think its solid foundations will help BT overcome the challenges it will face in the foreseeable future. I’d buy some shares this month.  

Charlie Keough does not own shares in BT.  

BAE Systems

What it does: BAE Systems is a leading defence, aerospace, and security company that serves both the UK and US governments.

By Edward Sheldon, CFA. BAE Systems (LSE: BA) strikes me as a relatively safe pick in the current environment. Given the high level of geopolitical uncertainty arising from the Russia-Ukraine crisis and the tension between China and Taiwan, governments are unlikely to reduce their defence spending any time soon.

Aside from the supportive backdrop, one thing I like about BAE Systems is the attractive dividend yield on offer. At present, analysts expect the company to pay out 26.3p per share for 2022. That equates to a yield of over 3% at the current share price. The company is also buying back its own shares – an extra reward for shareholders.  

It’s worth pointing out that if the Russia-Ukraine crisis was to come to an abrupt end, sentiment towards defence stocks could deteriorate. This could have a negative impact on BAE Systems’ share price. Overall, however, I think BAE is a good stock to own right now.

Edward Sheldon has no position in BAE Systems.

InterContinental Hotels Group

What it does: InterContinental Hotels Group operates a number of different hotel brands across the globe, including Regent Hotels, Crowne Plaza, and Holiday Inn. 

By Andrew Woods. My top British share for October is InterContinental Group (LSE:IHG). This hotel operator was battered during the pandemic, as virtually all of its hotels were forced to close. As a result, it slumped to a $280m pre-tax loss for 2020. By 2021, however, when many restrictions subsided, the business reported a pre-tax profit of $361m.

For the six months to 30 June, the firm stated that operating profits doubled to $377m. Furthermore, it announced that it was reinstating its dividend for the first time since 2019. It paid an interim dividend of ¢43.9 per share, a 10% increase compared to the same period in 2019. Moreover, it’s embarking on a $500m share buyback scheme. This is a signal that the company is in a strong financial position, although I’m always aware of the threat of further pandemic variants.

The business also offers geographical diversity, with established operations in the US and Europe, and a growing presence in China.

Andrew Woods has no position in InterContinental Hotels Group.

Reckitt

What it does: Reckitt is a consumer goods company. It primarily produces health, hygiene, and nutritional products, and is famously known for brands such as Dettol, Strepsils, and Durex.

By John Choong. As the UK heads into a recession, discretionary spending is expected to decline. However, demand for products from Reckitt (LSE: RKT) isn’t likely to wane due to its inelasticity as consumer staples, thus making it a contender for a position in my portfolio this October.

Although inflation can’t be ignored, the superiority of its brand appeal is unmatched across many of its product categories. This has allowed the group to raise the prices of its products while maintaining healthy profit margins of 22.5% in its latest half-year results, with management expecting better growth in the second half of the year. The fact that Reckitt earns the bulk of its revenue from outside the UK also makes it a safer investment due to the geographical diversity of its income steam.

Nonetheless, it’s worth noting that Reckitt’s balance sheet isn’t the healthiest. Having quite a high debt-to-equity ratio (107%) isn’t ideal in a high interest rate environment, and is something I should definitely take note of.

John Choong has no position in Reckitt.

However, not all of the companies in the FTSE have benefited from this strong support. Today I want to look at three unloved companies I think could be bargain buys at current levels.

#1: DS Smith promises 6% yield

Shares in packaging group DS Smith (LSE: SMDS) have fallen by 40% over the last year as investors have priced in the risk of higher costs and a slowdown in demand.

However, CEO Miles Roberts recently said that trading since May has been in line with broker forecasts, despite rising raw material costs and higher gas prices.

According to Roberts, the company has been able to pass on most increases by raising its packaging prices. Hedging arrangements have also helped to limit the impact of high energy costs.

Roberts says that he remains confident in the outlook for this year and expects “a significant improvement in performance”.

Broker forecasts currently price DS Smith shares on just eight times forecast earnings, with a 6% dividend yield. Although falling demand is a risk, I think this could be a good time to buy.

#2: Berkeley should be a long-term winner

My next pick is upmarket housebuilder Berkeley Group (LSE: BKG). This business has an impressive record of timing market cycles successfully, so I tend to pay attention to its trading reports.

In its latest update, Berkeley said sales were running ahead of the same period last year. Strong demand for the firm’s new homes — which sold for an average of £600k last year — has allowed the company to raise its selling prices to cover higher costs.

Berkeley’s pre-tax profit is expected to hit £600m in 2022/23. This should continue to support the company’s policy of returning £282m to shareholders each year through share buybacks and dividends. That’s equivalent to a 7% return at the current share price.

The big risk here is that the UK housing market will suffer a more serious downturn than expected. If housing transactions slow right down, then Berkeley’s profits could slump.

Personally, I’m comfortable with this risk. I think this FTSE 100 share offers good value at current levels.

#3: ABF’s household names look safe to me

My final pick is family-controlled food and fashion group Associated British Foods (LSE: ABF).

This unusual business owns the Primark fast-fashion chain, as well as a wide range of food businesses. Popular ABF grocery brands include Twinings, Silver Spoon, and Blue Dragon.

Food sales are performing well this year, with profits ahead of expectations.

However, profits from Primark are expected to be lower, despite a recovery in sales. High energy costs and the strong dollar are causing costs to rise. Rather than hike prices, ABF has opted to accept lower profit margins in order to protect its market share.

This news caused ABF’s share price to fall to a 10-year low. However, my feeling is that this is probably a buying opportunity.

ABF has plenty of cash and can afford a short-term hit to profits. With the stock trading on just 10 times forecast earnings, I see this FTSE 100 share as a long-term buy.

Improving momentum

Rising interest rates and the increasing cost of living both pose a threat to housebuilders like The Berkeley Group (LSE: BKG).

But despite these pressures the industry has so far remained extremely robust. In fact, home values keep growing by double-digit percentages. According to Halifax, the average UK property price rose 11.5% on an annual basis in August.

Pleasingly for Berkeley too, the market is rapidly improving in London. This is good for the business as it concentrates on home construction in the capital and South East.

The average home price in London hit a new record of £554,718 last month, Halifax said. This was up 8.8% on an annual basis and was the fastest rate of growth since 2016.

6.4% dividend yield

Persistent share price weakness means that Berkeley currently commands a forward P/E ratio of just 8.6 times. This is extremely low, in my opinion, given the ongoing resilience of the market.

The company itself claimed last week that it remains on course to meet profit forecasts for the current financial year to April 2023. It noted that “[a] good level of demand continues to support pricing above business plan levels” and that prices remain “sufficient” to cover increased costs on a business-wide basis.

City analysts believe Berkeley will pay a full-year dividend of 212.4p per share this year. And they think the builder will hike the full-year payout to 221.5p in financial 2024.

As a consequence the firm’s dividend yields clock in at 6.1% and 6.4% for this year and next respectively.

A dividend growth hero

Associated British Foods (LSE: ABF) is another FTSE 100 stock I’d buy for passive income. The food and clothing business raised annual dividends at a compound annual growth rate of 8% in the decade up to the pandemic. And while the company faces some near-term trouble as product costs soar, I expect ABF to deliver stunning earnings and dividend growth over the long haul.

I like this stock because of the enormous potential of its Primark low-cost clothing/lifestyle division. Demand for its cut-price apparel is surging as consumers demand more bang for their buck. And rapid expansion here has the potential to supercharge profits for ABF.

Primark will enter its 15th market later this year when it opens a store in the Romanian capital of Bucharest. The business has also recently launched ‘Click & Collect’ operations to latch onto the e-commerce boom.

As for dividends, City analysts expect a payout of 45.3p per share and 47.6p for the financial years to September 2022 and 2023 respectively. These projections create chunky yields of 3.4% and 3.5%.

Recent share price falls also leave ABF trading on a forward P/E ratio of just 10 times. In my opinion this makes the firm a top dividend-paying value stock to buy.

My research suggests that some of the smaller members of the index currently offer the best value. Today, I want to look at two of these companies, including one I’ve already bought for my portfolio.

Why are ITV shares so cheap?

My first pick is ITV (LSE: ITV). Shares in the UK’s largest commercial broadcaster (home of Love Island, Tour de France, and Murder in Provence) have fallen by 40% over the last year.

Even the continued growth of the ITV Studios production business has not reassured investors. Studios generates about a quarter of ITV’s profits and helps to diversify income by selling to external customers like Sky and Netflix.

What’s upset investors are ITV’s plans to upgrade and expand its streaming services. In March, CEO Carolyn McCall revealed plans to spend an extra £230m on digital content and technical upgrades by the end of 2023.

That’s a lot of money, but I think it’s the right choice.

Many people watch all of their television on demand already. More will do so in the future. ITV channels currently have a 22% share of viewing in the UK. McCall needs to protect this share as viewing moves online.

The big risk is that this investment will fail to deliver the extra online revenue she is hoping for. If that happens — and ITV loses viewers to streaming platforms — there could be a problem.

However, this year’s share price slump has left ITV shares trading on a rock-bottom price to earnings ratio of five, with a dividend yield of 7.5%. That looks far too cheap to me, so I’ve bought ITV shares for my portfolio.

A homegrown FTSE 100 bargain?

When I buy shares, I hope to keep them for a long time. To help me succeed, I look for companies with a record of long-term growth. One business that’s been on my radar for several years is food and fashion group Associated British Foods (LSE: ABF).

This family-controlled business can trace its history back to 1935, when Garfield Weston founded Allied Bakeries. Today, ABF owns fashion and lifestyle retailer Primark, as well as a range of essential food and agriculture businesses.

ABF has had a tough few years. Primark doesn’t sell online and had to close its stores completely during the Covid lockdowns. More recently, soaring commodity prices have put pressure on profits in the group’s food businesses.

These are short-term problems however, and I’m confident ABF can continue to adapt and grow. Sales have bounced back strongly at Primark, which is also starting to experiment with some aspects of online trading, mostly click and collect.

Meanwhile, the group’s food businesses are adapting and putting up prices where necessary. City analysts expect ABF’s profits to reach £1bn this year — a level not seen since 2018.

ABF shares are currently trading on a forecast price/earnings ratio of 13, with a dividend yield of 2.7%. That’s cheaper than they’ve been for many years. Although the company still faces some challenges, I think this could be a good entry point for a new long-term investment.

[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]

Premier Foods

What it does: Premier Foods manufactures a variety of branded and supermarket own-brand packaged food products.

By Stephen Wright. My top British stock for investors to buy in July is Premier Foods (LSE:PFD). I’ve been interested in this stock for a long time, but I think it might finally have reached a stage where I’d like to buy shares for my portfolio.

If you’ve ever heard that your branded custard and your supermarket-brand custard are from the same factory, this is true. And Premier Foods is the company that owns that factory.

I think that demand for this company’s products should remain stable, even in a recession. And the stock trades at a price-to-earnings (P/E) ratio of just under 13, which I think is reasonable.

To my mind, Premier Foods had always had too much debt and that’s stopped me from buying shares. However, with management having substantially reduced debt over the past few years, I’m looking at buying shares in July.

Stephen Wright does not own shares in Premier Foods.

Grainger 

What it does: Grainger is the largest residential landlord on the London Stock Exchange with a portfolio of around 10,000 homes. 

By Royston Wild. In theory, residential landlords like Grainger (LSE: GRI) could suffer some turbulence as the economy sinks. As the employment market weakens, the chances of their tenants missing rent payments increases. 

Recent data showing Britons drastically cutting food spending indicates the extreme financial pressures people are facing today. 

Past events are not always an accurate indication of what’s to come. But encouragingly, history shows us that spending on accommodation by and large tends to remain stable during all points of the economic cycle. As a result, I think Grainger is an ideal stock for me to buy in July as the cost-of-living crisis worsens. 

In fact, this is a property stock I’d buy to own for the long haul. The UK’s shortage of available rented homes looks set to drag on, meaning Grainger should continue to enjoy strong rental income growth.

Finally, I like the steps the business is taking to rapidly expand to supercharge profits growth. For instance, in late May it spent £128m to acquire another build-to-rent development in Bristol. 

Royston Wild does not own shares in Grainger. 

Associated British Foods

What it does: ABF owns fashion retailer Primark and a range of food businesses, including Kingsmill, Twinings and sugar producer AB Sugar.

By Roland Head. Family-controlled Associated British Foods (LSE: ABF) has been through a tough period. But I think I am now seeing a rare buying opportunity for this stock.

Primark was hit hard by the pandemic because it doesn’t sell online. But the company’s value offering is chiming with consumers battling the cost-of-living crisis. Primark sales rose by 81% to £1.7bn during the 12 weeks to 28 May, compared to the same period last year.

Interestingly, Primark is now trialling a click-and-collect service. This could lead to a full online retail offer.

The main risks I can see relate to ABF’s food and agriculture businesses. With costs rising, I can imagine that profit margins could be squeezed by big buyers such as supermarkets.

However, ABF shares currently trade on around 12 times forecast earnings. I’ve rarely seen them so cheap. I think this could be a great long-term buying opportunity for my portfolio.

Roland Head does not own shares in Associated British Foods.

Reckitt

What it does: Reckitt is a consumer goods company that is focused on health, hygiene, and nutrition.

By Edward Sheldon, CFA. Given the amount of economic uncertainty we’re facing right now, I think it’s a good idea to buy more defensive dividend stocks for my portfolio. And one stock that fits the bill here is Reckitt (LSE: RKT).

Reckitt is certainly defensive in nature. Even in a recession, people are still going to buy its health products (e.g. Strepsils lozenges) if they fall ill. Meanwhile, it also has a nice dividend. At present, the prospective yield on offer is just under 3%.

Another attraction of Reckitt is that it’s currently benefiting from the infant formula shortage in the US. With a major rival recalling its products due to contamination fears, the company has been able to capture market share. This has boosted revenues on the nutrition side of the business.

Now, this stock does have an above-average valuation, which adds some risk. However, all things considered, I think it’s a smart buy for my portfolio in the current environment.

Edward Sheldon owns shares in Reckitt.

AstraZeneca

What it does: AstraZeneca is one of the largest biotech firms in the world focused on tackling cancer, respiratory, and cardiovascular diseases.

By  Zaven Boyrazian. The biotech sector is fraught with enormous development challenges and financing risks. Yet, for the groups that succeed, humongous growth can be uncovered. That certainly seems to be the case for AstraZeneca (LSE:AZN) at the moment.

Despite being a giant “blue-chip” player in the space, shares have climbed by almost 30% year-to-date. The company has been delivering a slew of positive clinical trial results for several of its ongoing projects. But most notably is its phase 3 breast cancer treatment, Enhertu, which achieved a 49% reduction in disease progression versus traditional chemotherapy.

The drug is now being recommended for European approval by the Committee for Medicinal Products for Human Use (CHMP). And, if granted by regulators, it could untap a multi-billion-dollar market opportunity from just one of its products in the pipeline.

Pairing this exciting prospect with a diverse product pipeline and plenty of resources at its disposal makes AstraZeneca a business I’m considering for my portfolio today.

Zaven Boyrazian does not own shares in AstraZeneca.

Fresnillo

What it does: Fresnillo is a miner and producer of precious metals, including gold and silver, and operates in Mexico.

By Andrew Woods. In 2021, Fresnillo (LSE:FRES) reported that profit before tax had increased by about 10.9%, while revenue grew by 11.2% over the same period. Much of this has been due to higher metal prices over the past couple of years.

While silver production remained flat last year, gold production fell by 2.4%. This decline may be offset in future by the opening of two new plants at Juanicipio and Pyrites. Both of these could bolster production in the years ahead.

In a wider sense, investors may flock to gold and silver to avoid inflationary risk. With inflation set to rise to 10% in 2022, this trend could mean that the value of Fresnillo’s produce increases over time.

There are risks, though. The company could begin to feel the pinch from higher energy costs. In addition, there is the challenge of workers’ potential wage inflation. Further regulations may also impact on operations, as could any pandemic resurgence.  

Andrew Woods does not own shares in Fresnillo.

B&M European Value Retail SA

What it does: B&M is a discount retailer selling branded products to over four million customers a week.

By Paul Summers: Its share price has been struggling lately but I reckon discount retailer B&M European Value Retail SA (LSE: BME) is worth a closer look. With inflation likely to continue climbing over the summer, the company is well placed to benefit from an extended period of belt-tightening by UK consumers.

True, recent full-year results weren’t particularly well received. Revenue was down slightly on the previous year (but still way up compared to two years ago) and profit was flat. News that the CEO Simon Arora is to depart has also made investors nervous.

Still, I think a lot of bad news is now baked in. A P/E ratio of just over 10 at the time of writing looks reasonable. A 5% forecast dividend yield is chunky and looks very unlikely to be cut based on earnings expectations.

Paul Summers does not own shares in B&M European Value Retail SA

Rolls-Royce

What it does: Rolls-Royce is a manufacturer of engines for commercial aircrafts, business aviation and military transport, as well as developing onsite power and propulsion systems.

By Andrew Mackie: The recent woes of Rolls-Royce (LSE: RR) have been well documented, but I am starting to see real value at the level the share price is trading at.

What has sparked my interest was the recent civil aerospace investor day, which has led me to believe that there is light at the end of the tunnel.

Consistent investment over many years in its core markets of wide-body aircrafts and business aviation are starting to bear fruit. The business is now going through a period of less-intense new-product introductions, meaning that it will be able to capture a greater proportion of revenues through lucrative service contracts.

Another area that has seen explosive growth is in the passenger-to-freighter conversions. Rolls-Royce is primed to capitalise on this emerging trend. As supply chains have become increasingly constrained, companies have been looking for new ways to move their goods across the globe. The Trent 700 engines have a near complete monopoly in this space.

Exactly timing a likely recovery in the share price is impossible. But I am convinced that, long term, the trend will be higher.

Andrew Mackie does not own shares in Rolls-Royce.

British American Tobacco

What it does: British American Tobacco is a United Kingdom-based, multi-category consumer goods company that provides tobacco and nicotine products.

By Kevin Godbold. It’s hard for me to ignore the tempting numbers coming from British American Tobacco (LSE: BATS). With the share price near 3,560p, the forward-looking dividend yield for 2023 is just above 6.8%.

Annual dividend payments have been rising for several years. And they are backed by a robust flow of cash into the business. Meanwhile, elevating profits and a vibrant share buyback programme look set to drive earnings higher.

BATS is winning market share for its new products aimed at reducing some of the harmful effects of smoking. And losses have been reducing for the category. But the traditional smoking products are still a cash cow for the company despite a trend of declining worldwide volumes.

The industry faces intense regulatory scrutiny at times. And that could increase the risk for investors. But I’m holding the stock and believe it could do well in July and beyond.

Kevin Godbold owns shares in British American Tobacco.

Breedon

What it does: Breedon is the UK’s largest independent construction materials firm. It produces cement, aggregates, asphalt, and other construction materials.

By John Choong. With the government recently announcing its new ‘Help to Build’ scheme, there are a number of stocks that could benefit from the initiative. One of which is AIM-listed, Breedon (LSE: BREE). A new house typically uses more than a 100 tonnes of cement and aggregates combined, on average. Therefore, new builds from the scheme should bring a tailwind to Breedon’s top line.

Breedon has multiple streams of income. The firm builds other infrastructure as well, such as roads, of which it has a sizeable contract surfacing and highway maintenance business. Additionally, the S&P Global/CIPS UK Construction PMI (a measure of how well the construction sector is doing) is still posting strong figures of growth.

So, with a P/E ratio of 13 and a forward P/E of 10, the stock definitely seems reasonably priced. Analysts have also given the stock an average price target of £1.00. As such, Breedon shareholders could potentially grow their money by 60%.

John Choong does not own shares in Breedon.

Unilever

What it does: Unilever is a fast-moving consumer goods manufacturer that owns premium brands like Dove. 

By Christopher Ruane. It has been a challenging year for consumer goods maker Unilever (LSE:ULVR). The company behind premium brands like Domestos and Lynx has been battling with rampant cost inflation. That threatens to eat into profit margins.

I think that helps explain why the Unilever share price has fallen by 13% over the past year. Investors are worried that inflation could hurt profits. In the short term, I think that is true. But I am a long-term investor, and reckon the current share price is a buying opportunity for my portfolio.

The sort of pricing power premium brands give a company can help it offset the challenge of inflation. So though Unilever’s volumes slipped 1% in the first quarter compared to the prior year, it still managed to grow sales by 7.3%. I think this resilient business model makes it an attractive buy for my portfolio at its current price.

Christopher Ruane owns shares in Unilever.

Urban Logistics REIT

Urban Logistics REIT (LSE: SHED) plays a major role in getting goods to online shoppers. The business operates large distribution spaces and, more specifically, in the ‘last mile’ of a parcel’s journey from retailer, manufacturer, and courier to the customer.

I think this FTSE 250 business could thrive as online shopping steadily grows. The supply of warehouse and logistics spaces has failed to keep up with demand in recent times. The current development pipeline suggests that this shortfall should persist for years to come too, meaning the rents Urban Logistics can charge should continue growing robustly.

Right now, the business offers excellent all-round value. It trades on a price-to-earnings growth (PEG) ratio of 0.5 and carries a 5.4% dividend yield.

I think Urban Logistics is a top buy even though its thirst for acquisitions carries significant risk. A facility could fail to attract tenants if, say, it is ultimately seen to be in an unfavourable location.

Associated British Foods

I think the growth of value retail and e-commerce could supercharge profits at Associated British Foods (LSE: ABF) soon.

This clothing segment has been expanding strongly and ABF’s Primark is been a leading player here. And the industry looks poised for more long-term growth as consumers become more careful with their money.

I worried about how Primark’s lack of an online presence could harm its profits opportunities. Therefore, news this week that the clothing and lifestyle retailer will begin trialling click-and-collect has improved my feelings towards the stock. This could be a gamechanger in the brand’s battle against competitors like ASOS.

I’d buy FTSE 100-quoted Associated British Foods despite the headwinds created by rising costs. Increasing raw materials, labour, energy and freight costs all pose a near-term danger.

Centamin

Gold mining stocks like Centamin (LSE: CEY) tend to rise in value when times get tough. The eternal appeal of the sentimental metal makes gold the ultimate flight-to-safety asset — and, by extension, producers of the stuff — to many investors.

Gold’s sliding price in 2022 however shows that demand doesn’t always detonate in difficult times. This time around a soaring US dollar and extreme central bank rate hikes have damaged interest in the commodity.

However, I think that bullion and bullion producers could rebound sharply in price before too long. And that makes FTSE 250-listed Centamin a great buy right now. Inflation continues to soar despite aggressive action by central banks.

Meanwhile key economic indicators are increasingly suggestive of a sharp economic cooldown. I think gold might roar back towards the record highs recorded during summer 2020.

Today, Centamin trades on a price-to-earnings (P/E) multiple of around 10 times. Its dividend yield meanwhile sits at 5.8%. These numbers reinforce the company as a great dip buy, in my opinion.

Finger in many pies

Associated British Foods (LSE:ABF) is quite literally a one-of-a-kind business. I don’t know of any other company that owns a leading high-street fashion brand while also being one of the largest sugar producers in the world. In fact, ABF is really a collection of varied businesses that also includes groceries, agriculture and ingredients.

This diversification, I believe, is ultimately its greatest source of strength and competitive advantage. At the height of the pandemic when Primark stores were closed, it was its motley collection of food businesses that took up the slack and enabled the company to remain profitable.

Today, as inflation rips through the economy, diversification is likely to be a key driver of its continued success. The company had already announced price increases for its autumn/winter clothes offer. For now, it’s unclear what effect this might have on price-sensitive customers.

In its sugar business, the latest quarterly trading statement revealed that elevated commodity prices helped to drive a 7% increase in revenues compared to the same period last year.

It was a similar story in its agriculture division, where soaring wheat prices meant that farmers rushed to buy ABF’s crop protection products to maximise yields.

Primark goes online!

The most exciting development to come out of ABF’s update is that Primark is to start selling clothes online, initially in a click & collect test phase only.

The range of clothes on offer in the trial will be exclusively from its children’s range and limited to 25 stores across the northwest.  ABF believes that such an offering has the potential to satisfy unfulfilled demand, as well as helping to drive footfall from both existing and new customers. Around 40% of the ranges in the trial will be exclusive to click & collect.

The orders will be processed and dispatched manually from a dedicated UK distribution centre. This could increase labour costs in the short term. However, the business is expecting to introduce automation in due course. Additionally, returns will be free of charge.

ABF is undervalued

Today, ABF’s share price is trading only 5% above what it was at the height of the Covid sell-off. To me, that makes no sense.

All its Primark stores are open. Retail selling space increased by 0.3m sq ft since the beginning of the financial year. This year, a further 0.5m sq ft will become available in total. Five further stores will open this year, many in high-growth markets.

Now, as Primark takes it offering online and ABF’s other businesses capitalise on higher commodity prices, I believe it’s only a matter of time before the market cottons on to this ‘hidden’ gem. That’s why I recently added to my position.