If you don’t have any investing experience and are investing for the first time, the stock market can seem like a daunting place. Indeed, with over 100 stocks in the UK’s leading blue-chip index (the FTSE 100) alone, deciding which company best deserves your cash can seem like a huge undertaking.
So, if you’ve just begun your investing journey, and don’t know where to start, here are two stocks that I think would make great additions to any starter portfolio.
The new oil Data is the 21st-century economy’s oil, and Experian (LSE: EXPN) is one of the largest data managers in the world. The company, which is best known for its credit rating services, gathers, analyses and distributes data for customers and clients all over the world and has built a reputation for being one of the best in the data business. This reputation is critical in a world where customers are becoming increasingly concerned about who has access to their data and what it is being used for.
Experian’s data skills are so impressive that City analysts believe new rules on how data is handled will actually benefit the company. For example, following the introduction of new regulations regarding the processing of data in Brazil earlier this year, analysts at investment bank Credit Suisse (SIX:CSGN) announced they believe the changes will drive double-digit margin growth in the region for “the foreseeable future,” as Experian takes market share from weaker competitors.
Considering its market-leading position, I think Experian’s earnings will continue to grow for many years to come, and while shares in the firm might be a tad pricy (they’re dealing at a forward P/E of 28.6) I’m happy to pay a premium to take part in Experian’s global growth story. The stock also supports a dividend yield of 1.8% at the time of writing.
Investing with management My second FTSE 100 pick for a starter portfolio is Glencore (LON:GLEN) (LSE: GLEN). There are two main reasons why I like this company. Firstly, it is one of the world’s leading commodity trading houses. The firm trades everything from coal, oil and gas, to grain, sugar and copper. There’s a good chance you will come into contact with a commodity that’s passed through Glencore’s operations every day.
As the world’s economy continues to grow, demand for commodities will only expand, and that means Glencore’s sales will only expand. At the same time, this company is still majority owned by its founders and managers. This tells me that management has shareholders’ interests in mind, as the decisions they make about the direction of the business will have an impact on their wealth as well as the wealth of outside investors.
With these two positive tailwinds behind the company, I think it is worth taking advantage of today’s attractive valuation to snap up shares in Glencore. At the time of writing the stock is trading at an attractive P/E of just 10.2 and supports a dividend yield of 5.3%.
Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Experian. 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.
Motley Fool UK 2019