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2 blue chip companies that would consider buying on the FTSE 100 in June

Investor looking at stock chart on a tablet with his finger hovering over the Buy button

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THE FTSE100has increased in 2024. Up 6.2% so far this year, including a 1% increase in May, I am optimistic for June and the months to come.

As such, I’ve been scouring the index for potential stocks to grab. Here are two high-quality companies that caught my attention. I think investors should consider buying them today.

TESCO

My first selection is TESCO (LSE:TSCO). Like the Footsie, he had a good start to the year. Its stock price rose 7.2%. Over the past 12 months, this is an impressive 19.8% increase.

But I think Tesco shares have more to offer. There are several reasons why I like it as a long-term play today.

First, it is a defensive action. Come rain or shine, the demand for the products she sells will always be there. After all, regardless of problems such as difficult economic conditions, people need to eat and drink. We saw the benefits of this in its latest annual results release, where the group’s sales, excluding VAT and fuel, increased by 7.2% in the 52 weeks to February 24.

Of course, it’s not that simple. And despite constant demand for its products, it has recently faced competition. Much of this comes from budget supermarkets such as Aldi and Lidl. In recent years, particularly due to the cost of living crisis, they have become more popular than ever.

But Tesco remains the largest player in this area with a market share of 27.4%. The closest is Sainsbury’s with 15.3%. Its dominant position gives it an advantage over its competitors, in particular by being able to benefit from economies of scale.

To go with this, there is also the opportunity to generate passive income through its 3.9% dividend yield. This is just above the Footsie average. For 2023, its dividend increased by 11% year-on-year to 12.1p.

GSK

My second selection is GSK (LSE:GSK). It also benefited from the Footsie rally, up 19.3% since the start of the year. This is an increase of 28.7% over the last 12 months.

Like Tesco, I am bullish on GSK given its defensive nature. The company delivers more than 1.5 million doses of its vaccines every day. Just like food and drink, people need medicine and treatment regardless of economic circumstances.

In addition to this, the title also offers passive income. Its yield is slightly lower than Tesco’s, at 3.3%. However, in the future, its yield is expected to continue to increase.

There are a few risks that I see. First, pharmaceutical companies must invest millions in R&D to bring drugs and treatments to market, with the risk that nothing will come of it. Lately, concerns have also been raised about the depth of GSK’s drug pipeline.

But with the company recently announcing that it has around 90 products in its R&D pipeline, I’m confident that the coming years will see sales start to pick up again. Additionally, the stock appears to offer good value, trading around 15 times earnings. I think now might be a good time to consider buying.

The article 2 blue chip companies that would consider buying on the FTSE 100 in June appeared first on The Motley Fool UK.

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Charlie Keough has no position in any of the stocks mentioned. The Motley Fool UK recommended GSK, J Sainsbury Plc and Tesco Plc. The opinions expressed about companies mentioned in this article are those of the author and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that considering a broad range of information makes us better investors.

Motley Fool UK 2024