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.

Recruitment

Shares in recruitment specialist Hayes (LSE: HAS) have faded over the past 12 months. I’m not surprised, with such a gloomy economic outlook.

But results released Thursday were anything but disappointing. For the year to 30 June, net fees rose by 30%. And operating profit soared by 121%.

The company more than doubled its ordinary dividend, to 2.85p per share. That’s only a 2.4% yield. But thanks to strong cash generation, it added a special dividend of 7.34p and lifted its share buyback programme to £75m.

Chief executive Alistair Cox spoke of “long-term structural opportunities, acute skill shortages and strong markets.” It seems there’s some significant upside when we’re in times of economic turmoil. And Hayes might be just the kind of investment to profit from a recovery.

We’re looking at a modest trailing price-to-earnings (P/E) ratio of around 13.

Biopharma

PureTech Health (LSE: PRTC) recorded a loss in 2021. And, at the halfway stage in 2022, it’s still very much a biotechnology company working towards sustainable future profits.

The share price has been picking up in the past couple of months, and barely moved on results day.

The year so far has all been about clinical development. In the words of chief executive Daphne Zohar, “the first half of 2022 has been an exceedingly strong period for PureTech.”

Phase 3 trials of schizophrenia treatment KarXT appears to have gone very well, without the serious side effects that apparently come with existing treatments. Zohar adds: “It is now poised to potentially be the first new class of medicine in over 50 years for patients living with schizophrenia.“

The balance between long-term potential and current liquidity is key. Though PureTech recorded a loss again, it had $341m cash and equivalents at 30 June. That looks good enough to me.

Building

CRH (LSE: CRH) is my final pick of companies reporting Thursday. And its share price gained a few percent in response to interim results.

Chief executive Albert Manifold said: “CRH has delivered another strong performance with further growth in sales, EBITDA and margin despite a challenging and volatile cost environment.“

The firm reported a 14% rise in sales and a 21% jump in EBITDA. What’s more, the EBITDA margin improved, and bottom-line earnings per share increased by 36%

The company lifted its interim dividend by 4%, and it’s now set for a new tranche in its share buyback programme.

The one thing that concerns me is net debt of $4.3bn. That is down by $1.7bn, though, and looks easily manageable.

Thoughts

This is my first look at a single day’s reporting from these companies. I see attractions in all of them, but they all have their own individual risks too.

I’d never buy a stock based on just one update. But I’ve seen enough here to want to investigate all three further.

The CRH share price has fallen by 25% over the last year and is now 30% down from the record highs seen in late 2021. This slump has left the stock trading on just 10 times earnings, with a forecast dividend yield of 4%. I reckon it could be cheap.

As an income investor I’m always interested in stocks with dividend yields above the FTSE 100 average (which is currently 3.7%). Should I think about buying CRH shares for my portfolio?

Why I’m interested

Although CRH is often thought of as a cement business, it also supplies other staple materials such as aggregates, tarmac, paving, and concrete.

CRH operates globally through a range of regional brands, many of which have a big share of their local markets. In the UK, the group’s best-known brand is probably Tarmac.

Although some of CRH’s products have a hefty carbon footprint, I reckon they’re all an essential part of modern life. Fortunately, CRH is actively working to make its business more sustainable. The company aims to reduce carbon emissions by 25% by 2030 and to hit net zero by 2050.

In the meantime, I’m interested to see that CRH is expanding its product range into markets where it might be able to add more value. One area the company is targeting is “sustainable outdoor living solutions in North America”. Examples include paving and fencing.

My guess is that products aimed at the residential market could carry higher profit margins than standard construction supplies.

Recessions risk?

News headlines are full of the ‘R’ word at the moment. Recession.

A big recession in western markets could see global construction activity fall. That would be bad news for CRH, whose quarries and cement plants could see a slump in demand.

I don’t expect a major market crash like we had in 2008/9. But I think there’s a fair chance we’ll see some kind of slowdown over the next year or so, especially with interest rates rising.

Higher interest rates are likely to make new commercial property more expensive to build, as major projects are generally funded with debt.

Are CRH shares cheap enough to buy?

Overall, I think CRH is quite a good business. I’d consider buying the shares at the right price. But are we there yet?

CRH shares have now given up five years’ gains and are back where they were in 2017. But the company’s profits are around 20% higher than in 2017. For now, at least, CRH shares are cheaper than they’ve been for quite a few years.

On the other hand, I think the risk of a recession is probably higher than it’s been for quite a few years.

On balance, I think CRH shares look quite reasonably priced at the moment. But this business has quite high costs and fairly average profit margins. Ideally, this is a stock I’d like to buy at a rock-bottom valuation. I don’t think that’s true today, so for now I’m going to keep watching.

The number might not look particularly bad at any other time, but over the last year stock markets have risen a fair bit, which makes it stand out. Moreover, the stock was up some 5% yesterday, after the company released its latest trading update. If this had not happened, the fall would have looked a lot bigger. 

CRH posts positive trading update

But things are clearly looking up for it. For the first quarter of 2021, the company said that sales and profits were “ahead”. It did offer some more details for sales numbers, though not for profits. Its reported sales rose by 15% from last year. It expects the numbers to stay ahead for the first half of the year as well.

This sounds pretty impressive to me considering that its sales showed an appreciable rise in the past year. It has not said anything about net profits, but if they rise too, that would be even better considering that they were at their highest in three years during 2021. 

A cheap FTSE 100 growth stock

From the looks of it, this might just happen. Analysts have pencilled in an increase in earnings per share for 2022. This also means the CRH share price could rise further. The company’s price-to-earnings (P/E) ratio based on its 2021 earnings, is already at less than 10x, making it a cheap FTSE 100 growth stock. Its forward P/E is even lower at around 9x, which suggests that the stock might just be a good buy for me. 

This is especially so when compared to its FTSE 100 peer Ashtead, which has a P/E of around 22x right now. Also, the FTSE 100 average P/E is at around 15x. So whichever way I look at it, the stock looks cheap in terms of valuations. 

It is a stock to buy for the long term though. Over the last 10 years, it has more than doubled investors’ money. But in 2022 it has fallen quite a bit, making its five-year gains appear quite underwhelming. I would keep this in mind, because as a cyclical stock, there is always a chance that it can dip a lot, and fast. It has not recovered since the February dip in the stock markets, for instance. And considering that the IMF has just lowered global growth forecasts, it could definitely see a slowing down in the near future. 

What I’d do

On the whole, though, I like CRH enough to have bought it some time ago and I am holding for the long term. After its trading update, I am also planning to invest another £1,000 in it.  

FTSE 100 global champion

I am looking to buy stocks for my portfolio that have a global competitive advantage. This is an edge that competitors around the world may not be able to replicate.

There are many examples of competitive advantages. Size and scale are two of the most important. A unique product or service could be another sign of a strong competitive advantage. 

Building materials group CRH (LSE: CRH) exhibits several of these qualities. Manufacturing and distributing building products is one of those industries which investors often overlook. However, it fulfils an essential role in the global economy. Starting up a quarry or facility to convert raw materials into building products is not easy. It requires a lot of money and experience to develop these facilities.

It also requires permission from local authorities, which can be hard to maintain. Local authorities need to trust the company is responsible enough to develop a facility that will not harm the environment or the local population.

An edge in the market 

This is where CRH has an edge. The FTSE 100 company is one of the largest building materials companies in the world. It has the financial resources and the connections to develop these facilities effectively without getting bogged down in excessive regulation or having to ask shareholders for additional cash.

The company’s size means local authorities can rest safe in the knowledge that there will be room to achieve some sort of compensation if something goes wrong. 

Still, while the corporation does have an edge in the market, it is not immune to the risks involved. One of the most significant risks the company could have to deal with is environmental concerns. The construction industry is one of the biggest polluters in the world. Dealing with the costs of this pollution could significantly impact the organisation’s profit and profit margins.

Nevertheless, building activity around the world is booming, and the company is capitalising on this growth. According to its latest results release, sales increased 12% in 2021 and earnings before interest, tax, depreciation and amortisation (EBITDA) increased 16%.

Bolt-on acquisitions 

To help complement growth, the company is looking for additional acquisitions. Last year, it invested $1.5bn on 20 bolt-on acquisitions to help expand its presence in additional markets. The group is planning further acquisitions and capital spending to increase its footprint in certain markets. 

A key area of growth for the company is America. Here, management is excited by the recently announced $1.2bn infrastructure package, which could have a significant impact on the demand for construction materials across the region.

The number of housing starts has also recently hit a multi-year high, further reinforcing the company’s opinion that the demand for building materials will increase substantially across the US in 2022 and beyond. 

Based on these qualities and the outlook for the company, I think this is one of the best shares to buy right now. I would not hesitate to add the FTSE 100 stock to my portfolio with an investment of £3,000. 

FTSE 100 

Alongside CRH, I would also buy its blue-chip peer Ashtead (LSE: AHT). I think this is a really interesting company. It owns capital equipment, which it rents out to organisations like builders and other industrial companies.

This business model is incredibly profitable. It requires a lot of capital investment upfront, but once an enterprise has acquired the equipment, it can rent it out repeatedly and earn a high return on its initial investment.

Indeed, the company has reported a return on invested capital in excess of 50% in the past. This generates plenty of additional funding for the business to reinvest back into new growth initiatives and buy smaller peers.

During the six months to the end of October 2021, the company invested $1.2bn in the business and spent a further $428m on acquisitions. It is also benefiting from the construction industry boom taking place in multiple markets around the world.

Global growth

While the company’s biggest market is North America, it also has a strong presence in Europe. Rental revenue increased 18% year-on-year in the six months to the end of October. Operating profit increased 22% and adjusted earnings rose 29%. 

With profits surging, I think the group could report faster growth in the years ahead as it reinvests its capital back into growth initiatives and targets new markets.

That said, this company is very sensitive to the economic environment. One of the biggest challenges it will have to overcome is the uncertain economic outlook.

If spending falls in the construction industry, demand for its products and services could also decline. This would also certainly have a significant impact on profitability as a company is not making any money if its equipment is sitting its yards unused. 

Buy-and-forget holding 

Even after taking this potential challenge into account, I think the outlook for the business is incredibly exciting. As such, I would not hesitate to buy the stock for my portfolio today.

As the FTSE 100 company capitalises on the improving economic backdrop, I think it will be able to grow and invest more, further accelerating its growth rate over the next five to 10 years.

Even though the current geopolitical and economic environment could prove to be a significant headwind for the business, as a buy-and-hold investment for the next decade, I think this is one of the best shares to buy now with £3k.

Ashtead could rise further…

I think this bodes well for UK stocks that count the US among their biggest markets. Two of them are the FTSE 100 companies Ashtead and CRH. Ashtead, which provides industrial equipment on rent, gets some 80% of its revenues from the US. Crucially, the company is focused on the construction industry. Being cyclical, the industry could get a boost as growth stays strong. US President Biden’s Build Back Better bill is still hanging in the balance, but if it goes through, the stock could get an even bigger boost. 

The only catch to the stock is how steeply it has run up since the pandemic. It was a robust stock even earlier, but its rise has been particularly sharp in the past couple of years. This is despite some correction in recent months. Going by its positive earnings forecasts though, I think it could rise further. I think it is a good time to buy it for my portfolio. 

This FTSE 100 UK stock could too

CRH has a similar story to Ashtead. More than half the construction biggie’s revenues stem from the US market. I bought it a few months ago, and until a few days ago, things were going in the right direction. But it has dipped in the past couple of weeks, which might be a red flag. It also makes me wonder though if this is the right time to add to my holdings of the stock. I do like its price-to-earnings  ratio of 25 times. It is higher than the FTSE 100 average of 18 times, but then its prospects look better to me than that of the average stock too, so going by that it is still fairly reasonable. Especially now, after looking at the US economy’s latest numbers. It also expects profits to increase, which gives me even more hope. 

…as could Cineworld shares

Another US-focused UK stock I like, and one that is quite controversial right now, is Cineworld. The company was UK market driven, before its ill-fated acquisition of Regal Cinemas. Now, however, the US is its biggest market, and a booming economy is great news for consumer discretionary businesses like cinemas. There is no denying that the FTSE 250 penny stock has a mountain of debt to pay off. I believe that further moderation in the pandemic, the release of blockbuster movies, and consumers’ ability to spend in a high growth environment will hold it in good stead. I have long been bullish on the stock, and now I am even more so. 

It’s too early to claim we are now set for plain sailing as the Covid-19 crisis rolls on. But I plan to continue buying FTSE 100 shares, despite this ongoing threat. Here are two I’d buy today to hold for the long haul.

Playing the construction boom

The global population is rapidly growing and more and more people are moving into cities. According to the United Nations, around 68% of the world’s people will live in urban areas by 2050, up from 55% today. It predicts too there will be 43 so-called megacities (those with 10m-plus citizens) by 2030. That’s up 10 from current levels.

I’ve decided to cash in on this demographic trend by buying shares in CRH (LSE: CRH). This FTSE 100 share is the biggest building materials supplier in North America and Europe and has exposure to the fast-growing nations of Southeast Asia too. It supplies a broad range of materials from aggregates and concrete to pipes, glass, blocks, and everything in between.

I particularly like CRH because it has a great track record on the acquisition front. And, pleasingly, it has the appetite and the financial firepower to continue building its global empire (it spent around $1.4bn on M&A between January and mid-November). I’d think CRH is a top buy even though profits could suffer in the near term if the economic recovery runs out of steam.

Another FTSE 100 hero of mine

Bank of England interest rates have risen recently and are likely to keep rising to curb runaway inflation. The good news for savers is that this should feed into more attractive savings rates. The bad news is that rampant price rises mean they are unlikely to make spectacular returns on their cash in real terms.

This is why I believe stocks like Hargreaves Lansdown (LSE: HL) remain attractive shares to buy right now. Financial services firms like these provide the platform and the expertise for people to make a decent return on their cash. This is all-more important as concerns over the future of the State Pension increase (news that the pension age could rise quicker than expected has been all over the papers in recent days).

All this explains why Hargreaves Lansdown added 23,000 new clients in the three months to September, taking the total to 1.67m. The FTSE 100 firm added net new business of £1.3bn in the period which, in turn, drove total assets under administration 2% higher from the prior three months, to £138bn. I’d buy the business even though competition in the investment services sector is intense and future sales could consequently disappoint.

Thanks to this list, I think I will be able to act quickly to take advantage of opportunities when they present themselves. So here are three FTSE 100 companies that I would acquire in a stock market crash. 

Stock market crash shares to buy

The first company on my list is Intercontinental Hotels Group (LSE: IHG). A pandemic recovery play, I would buy this stock in a downturn, due to the strength of its brands. 

Over the past 18 months, I have watched the enterprise struggle through the pandemic and start to claw its way back to growth on the other side. I have been impressed by its resilience and the group’s continued growth in a hostile market environment. 

As the economy continues to recover from the pandemic, I think the demand for hotel accommodation will continue to increase. As one of the largest hotel groups globally, Intercontinental should benefit significantly from this tailwind. Therefore, I believe it could be an attractive addition to my portfolio at the right price. 

Challenges it may face in the future include additional pandemic restrictions and rising costs, which may put consumers off its premium brands. 

FTSE 100 events business 

I would also acquire Informa (LSE: INF) for the same reasons. The business services group experienced a significant downturn last year as its event division witnessed a near-total collapse in sales.

However, the organisation’s diversification helped it pull through the crisis. Informa’s specialist data and information businesses have continued to grow and enabled the group to achieve its target of becoming free cash flow positive from January.

Management expects free cash flow to total £325m in 2021, which is impressive considering its challenges over the past 18 months. 

Additional pandemic restrictions and competition in the data sector could hit these targets. These are the biggest challenges the group faces right now. Nevertheless, I am excited by Informa’s recovery potential and would jump at the chance to buy the stock at a lower valuation. 

Global rebuilding

Throughout the pandemic, one sector that was generally allowed to remain open was the construction industry. And coming out of the crisis, demand for construction and related materials has remained elevated. 

CRH (LSE: CRH) is one of Europe’s largest construction materials suppliers, with substantial economies of scale. As the world has started to rebuild after the pandemic, it has experienced rapid sales growth. Sales for the nine months to the end of September increased 11% year-on-year and, thanks to better economies of scale, the group’s profit margin increased by 0.5% for the period. 

Management is looking to make the most of this windfall. The group has already spent $1.4bn on acquisitions this year and has more deals in the pipeline. 

Despite CRH’s growth, I am wary about the group’s exposure to the construction sector. This is usually the first industry to feel the heat in an economic downturn. So as pandemic restrictions return across Europe, the firm’s growth could slow. 

FTSE 100 growth shares 

The first company I would buy is accounting software provider Sage (LSE: SGE). Currently in the middle of a transition from one-off sales to a cloud subscription model, I think the corporation is one of the best growth stocks in the FTSE 100. 

The firm’s transformation might take a few years to evolve, but I think Sage’s brand value should help pull consumers towards the business.

The stock is currently selling at a forward price-to-earnings (P/E) multiple of 33, which is a bit pricey for me. However, compared to its international peers, I think the stock looks cheap. It also yields 2.3%. 

The company’s growth could slow if the cloud rollout does not go to plan. That is probably the most considerable risk to the firm’s growth right now. 

Shares to buy 

Alongside Sage, I would also acquire CRH (LSE: CRH). The buildings materials group is currently reaping the benefits of the global construction boom. According to analysts, net profit could jump 150% by 2022 as demand for materials and prices rise. 

As one of the largest materials groups in Europe, CRH also benefits from economies of scale. This means its profit margins are wider than the industry average, and it can afford to return more cash to investors, as well as spend more on acquisitions. The stock currently yields 2.7%, and the business has been buying back shares in recent years. 

As CRH continues to grow and invest for the future, I think the stock has a bright outlook. It is also selling at a relatively affordable P/E of 15.7, which undervalues the group’s competitive advantages in my view. 

One risk that could bring CRH’s growth to a halt is an economic slowdown. This could cause demand for materials to drop and the company to miss growth expectations. 

Growth opportunity 

Pest control is not a glamorous business, but it is a growing one. That is why I would buy Rentokil Initial (LSE: RTO). 

This company is one of the largest pest control groups in the UK, but it has plenty of room to grow. It is expanding both here and overseas, where there is a steady stream of potential acquisitions. 

Figures suggest that rodent populations are rising as the world becomes warmer. This implies the demand for Rentokil’s services will continue to grow. As the company expands organically and through acquisitions, I think the stock is one of the best growth opportunities in the FTSE 100 right now. 

Some headwinds the firm might encounter include rising interest costs, leading to higher costs for the group’s debt. And more competition in the market may lead to slower growth. 

Gravity defying stock 

I am talking about the building materials company CRH (LSE: CRH), which has shown pretty impressive performance despite the pandemic. Consider this. The company’s stock price crashed, like all other FTSE 100 stocks, on the fateful day of 23 March, 2020. All things considered, I would have expected a cyclical stock like CRH to be impacted for some time to come. 

The lockdown brought almost all economic activity to a halt and put a cloud of uncertainty over how things might proceed. So, it was reasonable to assume that sectors linked closely with the economy would be most affected. And for most part, that was true. Banks, for instance, took their sweet time to start rising again as did travel stocks.

Despite being associated with construction, however, CRH was back to its pre-pandemic share price by as early as June 2020. And it has only risen since, except for a brief period in September this year. As I write today, it is hovering just below its recent one-year high. I have long been bullish on the stock and even though it might appear like bad timing, I bought it a few days ago.

CRH’s strong fundamentals

My reason for buying it now was this. The company’s share price does not come off often. And when it does, it does not stay down for very long. So now seems as a good time as any other to buy it. Also, when I look at its fundamentals, I am left with little doubt that it will continue to do well. It reported robust earnings for the first half of 2021. Its post-tax profits more than doubled from the same time last year. 

Rising dividends for the FTSE 100 stock

And the company increased its interim dividend by 4.5% over last year. Its dividend yield is still quite low at around 2.3%, compared to the FTSE 100 average of 3.4%. But, over time it can add up. And I reckon that much like Ashtead, which I wrote about recently, it can be rewarding from the income generation perspective  as well.

My takeaway

CRH’s outlook is positive as well. President Biden’s infrastructure plan in the US could bode well for it, considering that some 60% of its revenues come from there.  

There are things that could go wrong of course. In another article I wrote today, I speculate about whether the stock market could crash in 2022. Rising inflation and a slow recovery could indeed derail the stock market, causing it to potentially crash. Another rise in coronavirus infection could also happen. But on balance, I am positive on CRH, which is why I bought it and could buy more in 2022.