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The FTSE 100 index has made some solid gains in the past year as investors became bullish about the prospects of financial markets and the economy. Many of the index’s constituents have managed to chalk up double-digit increases in share prices. But among these, three stocks stand out for me in particular, which would make good additions to my investment portfolio in 2022.
#1. Ashtead: the biggest FTSE 100 gainer
The first of these is industrial equipment rental company Ashtead. It has seen a 70%+ increase in its share price this year as I write. It is possible that next year’s gains might not be quite as high as this, considering that its price-to-earnings (P/E) ratio at around 35 times is much higher than that for the average FTSE 100 stock.
But there is a whole lot for me to like about the stock. The first is its prospects, which look pretty sound considering that the US market, which is its biggest, could grow because of President Biden’s Build Back Better bill. Also, its long-term share price chart is encouraging, which to me shows a company that navigates itself out of economic downturns with relative ease. It is on my investing wishlist for 2022.
#2. Croda International: steady growth
Next, I like speciality chemicals manufacturer Croda International, which has risen by some 50% this year. Like Ashtead, it also has a confidence-building share price trajectory. And one look at some of its latest results indicates why. The company has performed well, growing both its profits and revenues. It is also optimistic in its outlook, which encourages me to consider buying the stock even though it is quite pricey.
Right now, it has P/E of 55 times, which makes it among the more expensive stocks. But considering that it upgraded its profit expectations for the second half of this year in its last update, I think there is some justification for its high P/E. Ideally I would buy it on a dip, but even without a dip, I think this is a good stock for me to buy for the long term.
#3. Royal Mail: e-commerce bonanza
Another long-term buy for me would be Royal Mail if I had not bought it already. The stock has seen an over 40% increase and it is not hard to see why. The letters and parcels delivery service provider has gained from the e-commerce boom, with its parcels revenues surpassing those from letters for the first time in the last financial year. With online shopping expected to carry on going strong, this segment should continue to rake in bigger revenues in the future as well. The rate of growth could slow down as the pandemic eases further, but I reckon that the stock is likely to continue rising. With a P/E of sub-6 times, it is a great stock to buy in my view, especially considering that it also pays dividends. This is why I bought it.
Manika Premsingh owns Royal Mail. The Motley Fool UK has recommended Croda International. 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.
