Starting out in the stock market isn’t easy, especially given the volatility we’ve had in August. But recent turmoil doesn’t mean investors should be deterred. Instead, I see plenty of good opportunities in the FTSE 100.
With that in mind, here are two stocks for beginners to consider taking a closer look at.
Beverage behemoth
First up’s Diageo (LSE: DGE). The company’s an alcoholic beverage giant. It owns brands such as Guinness, Captain Morgan, and Johnnie Walker.
The stock’s recorded a weak performance in the last five years. Its share price is down 28.3% during that time. In the last 12 months, it has lost 27.7% of its value. It’s down 13.9% in 2024 alone.
But with its share price taking a beating, I think the stock now looks cheap and good value for money. One key way to measure this is by looking at its price-to-earnings (P/E) ratio.
Diageo’s P/E is 17.9. The FTSE 100 average is 12, so that may look expensive. But with Diageo’s historical average being 22.4, it looks cheap by its own standards.
The reason Diageo’s been such a poor performer recently is because of a decline in sales in the Latin American and Caribbean region. In its latest update to investors, the business revealed they had fallen 21% year on year.
That feeds more widely into the threat Diageo faces, which is the cost-of-living crisis impacting the amount people are spending on alcohol. Consumers seem to be either switching to cheaper alternatives or stopping altogether.
But for investors who are buying for the long term, Diageo could be a good opportunity. With the premium brands it owns, I expect it to excel over the years and decades ahead. Diageo wants to increase its market share to 6% by 2030, up from 4.7% today.
Pharmaceutical giant
Next up is GSK (LSE: GSK), the pharmaceutical and biotechnology company.
In the last five years, the stock’s lost 7.2% of its value. However, it’s been gaining momentum more recently. In the last year, it’s up 14.2%. In 2024, it’s risen 5.8%.
I think it could be a stock to consider buying today for a few reasons. Firstly, it provides products such as vaccines and medicines. Where some industries sell goods that see demand come and go in cycles, given the essential nature of what GSK sells, it tends to see more steady demand. It delivers over 1.5m doses of its vaccines every single day.
On top of that, the stock looks good value. It trades on a P/E of 15.9. Again, that’s higher than the FTSE 100 average. However, it looks cheap compared to other businesses in its industry. For example, rival AstraZeneca trades on a P/E of 39.1.
One risk I see with GSK is the ongoing legal trouble it’s having related to its Zantac drug. A judge recently ruled in favour of 72,000 cases to go forward linking Zantac to causing cancer. These sorts of legal complications are always a threat when investing in pharma stocks.
But at its current valuation, and with its defensive nature, I think GSK could be a stock to consider buying. It’s on my watchlist.
This post was originally published on Motley Fool
