When I am looking for stocks to buy, I focus on the FTSE 100. In fact, I think this blue-chip index has some fantastic, undervalued growth stocks that I will buy today.
Shares of FTSE 100 rise
The first company I bought was an accounting software provider Sage (LSE: SGE). Currently in the midst of a transition from one-off sales to the cloud subscription model, I think the corporation is one of the best growth stocks in the FTSE 100.
The firm’s transformation may take a few years to develop, but I think the value of Sage’s brand will help draw customers to the business.
The stock is currently trading at a forward price-to-earnings (P / E) multiple of 33, which is a bit expensive for me. However, compared to its international counterpart, I think the stock looks cheaper. It also yields 2.3%.
The growth of the company may be slow if the cloud rollout is not planned. This is probably the most important risk for the firm’s growth at the moment.
In addition to the sage, I will also achieve CRH (LSE: CRH). Building Materials Group is currently reaping the benefits of the global construction boom. According to analysts, net profits could jump 150% by 2022 as demand and prices for materials increase.
As one of the largest material groups in Europe, the CRH also benefits from a scale economy. This means that its profit margins are wider than the industry average, and it can give investors more cash back, as well as spend more on acquisitions. The stock currently yields 2.7%, and the business has bought 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 being sold at a relatively affordable P / E of 15.7, which in my view devalues the group’s competitive advantage.
One risk that could stop the rise of CRH is the economic downturn. This can reduce the demand for materials and the company may miss growth expectations.
Opportunity for growth
Pest control is not a lucrative business, but it is a growing one. So I would buy Rentocill primary (LSE: RTO).
The agency is one of the largest pest control groups in the UK, but there is plenty of room for growth. It is expanding both here and abroad, where there is a steady flow of potential acquisitions.
Statistics indicate that the rat population is increasing as the Earth warms. This means that the demand for rentocill 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 headwind firms may face rising interest costs, including leading to higher costs for group loans. And further competition in the market could lead to slower growth.
Rupert Hargreaves has no position on any of the shares mentioned. The Motley Flower UK has recommended Sage Group. The opinions expressed about the companies mentioned in this article may differ from those of the authors and therefore the official recommendations in our subscription services such as Share Advisor, Hidden Winner and Pro. Here at The Motley Fool, we believe that considering different perspectives makes us a better investor.