In an article yesterday, I discussed three high-quality FTSE 100 stocks trading at discount prices. Here, I’ll tell you about three more top-notch, blue-chip bargains.
The FTSE 100 is currently 25% below its all-time high of two years ago. However, it’s always recovered and gone on to new highs. As such, I reckon October could be a great time for investors to start building a diverse portfolio of Footsie stocks.
A FTSE 100 defence stock
Few UK companies can boast a pipeline of work as big as BAE Systems (LSE: BA). The defence giant’s order book stood at £46.1bn at 30 June. This is testament to the group’s status as a trusted partner of the UK and US defence departments. Its reach also extends to other allied governments.
BAE reported a robust performance in the first half of the year. It expects full-year sales to increase by a low-single-digit percentage compared to last year. This will be helped by two acquisitions, and by increased volumes in the F-35 aircraft programme, combat vehicles and electronic defence offsetting lower commercial business.
At 493.9p, BAE’s shares are trading at a 26% discount to their 2020 pre-market-crash high. Valued at 11.6 times trailing 12-month earnings, and carrying a running dividend yield of 4.7%, I think this FTSE 100 stock is set to deliver an impressive return in the long run.
A family-controlled blue-chip business
I reckon the non-voting shares of asset manager Schroders (LSE: SDRC) are a better buy for small private investors than the company’s voting shares (SDR). Both classes of share are trading at discounts to their pre-crash levels (26% and 20% respectively). However, the non-voting shares are also at a 30% discount to the voting shares.
This is a wider discount than usual. It means the SDRC shares, at 1,938p, offer a significantly higher dividend yield than the SDR shares, at 2,753p. Currently, 5.9% versus 4.1%. As such, the non-voting shares are better for both income seekers and investors looking to compound their capital by reinvesting dividends.
The company was founded in 1804, and the unusual — but not unique — voting/non-voting share structure helps the descendents of the founders maintain a controlling interest. Family firms like this run the business on a conservative, multi-generational view. I think this aligns nicely with the aims of long-term private investors.
Another quality FTSE 100 stock
Associated British Foods (LSE: ABF) owns budget fashion chain Primark in addition to a number of food businesses. It doesn’t have two share classes, but is another FTSE 100 firm still controlled by descendents of the founders.
The shuttering of Primark stores under lockdowns earlier this year wasn’t good news for the group. However, its food businesses performed well. Furthermore, it said recently that both food and Primark exceeded management’s expectations for the 13 weeks to 12 September (the final quarter of the group’s financial year).
At 1,874.5p, the shares are trading at a 31% discount to their pre-crash level. This is another FTSE 100 stock where I believe there’s great value for long-term investors looking to build a blue-chip starter portfolio.
G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended Associated British Foods and Schroders (Non-Voting). Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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