How I'd Invest GBP 2K In The FTSE 100
Contributed by Anna Martyushev
28 June, 2021
Reports indicate that the FTSE 100 index is up 14% in the past year. This could be a clear sign that the UK economy is recovering. With the economy bouncing back, you might be wondering what the cheap stocks to buy now UK are to add to your investment portfolio. Here are a few examples of how you would invest 2k GBP in the FTSE 100.
Stocks You Should Consider Now
Hikma Pharmaceuticals (LSE: HIK)
This is a manufacturer of generic, branded and injectable pharmaceuticals. Hikma's share price has increased by over 13% in the last three months. The share price rose from 2225p per share in March to 2515p at the time of writing this piece. Some experts argue that the rise could be because of increased demand for Covid-19 medication.
Moreover, the company's 2020 full-year results were also extraordinary. Their financial reports revealed a 23% increase in their operating profit. Additionally, the revenue increased. Hikma is also bullish that the upward trend will continue in 2021. Even though it did not provide specifics about financials, the FTSE 100 incumbent confirmed the launch of 30 new products. It also claimed that the results were in line with their expectations.
Any stock you go for right now should pay a dividend. At the moment, Hikma's dividend yield stands at a little less than 2%. However, the 2020 dividend of 50 cents per share represented a 14% increase from 2019.
The company's main risk is its potential for lawsuits. Its business model heavily depends on manufacturing other firms' treatments at a fraction of the cost. Regrettably, there are already examples of lawsuits against the company.
Nevertheless, Hikma is well-positioned to benefit from the demand for more affordable healthcare growing globally.
Because of its financials and size, Hikma can invest heavily in research and development and marketing. Regardless of its challenges, you can confidently invest some of the 2000 GBP on the company's shares.
Diageo (LSE: DGE)
Diageo is a global spirits maker and brewer. When the market crashed in 2020, the company's share would have been an excellent buy as its share price has gone up by over 40%. At this moment, Diageo's shares are trading at 3499p compared to March 2020's market crash bottom of 2427p.
It is a smart business to add Diageo to your portfolio even if it is costly, trading at almost 30 times forward earnings. This is primarily because it is among the best performing FTSE 100 stocks. Moreover, as revellers go back to pubs, restaurants and bars, pent up demand has led to increased sales worldwide. Experts suggest that this upward trend will continue throughout the year.
Because of its recovery, the company plans to return more than 4.5 billion GBP in capital to stakeholders. The management also improved its profit projections for 2021, which is a cause for optimism. According to their projections, organic profit will grow by at least 14% in the financial year ending June 30th.
On the flip side, Diageo has its risks. First, emerging Covid-19 variants could interrupt sales. Second, the company's debt levels are a bit high. Nevertheless, Diageo is generally one of the best stocks to invest in.
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