When it comes to FTSE 100 investments, I would be happy to include many companies in the blue-chip index in my portfolio. 

However, I would be comfortable buying and owning only a couple of stocks for 2022 and beyond. 

My top FTSE 100 stock

The top FTSE 100 stock I would be comfortable owning in 2022 and beyond is the distribution group Bunzl (LSE: BNZL). 

There are a couple of reasons why I would buy this stock for my portfolio today. 

As the outlook for the global economy is highly uncertain, I want to own companies with predictable business models that also support competitive advantages. 

Distribution is a slow and steady business. It is also a trade where scale matters. Distribution profit margins tend to be razor-thin, which means even the slightest disruption or cost increase can significantly impact profitability. 

Thanks to its size, Bunzl supports industry-leading profit margins. This gives the company a certain level of protection against uncertainty and competitive advantage. 

It also means the FTSE 100 corporation has plenty of cash to invest in organic growth and for bolt-on acquisitions. Over the past few decades, the company has grown rapidly using a combination of these two strategies. It can buy up smaller businesses and then use its size and efficiencies to increase profit margins. 

The company supplies relatively straightforward but essential products used in the everyday operation of various businesses, such as first aid kits, PPE and plastic cutlery. 

Throughout the pandemic, the demand for these products has remained relatively robust. That is another reason why I want to own the stock. If the pandemic gets worse, Bunzl has already proven that its business model is relatively resilient. Of course, past performance should never be used to guide future potential, but I think the group has many attractive qualities for uncertain times. 

Attractive growth potential

Looking forward, it has plenty of growth potential, a solid competitive advantage, and offers a set of products buyers will continue to need even in uncertain times. I also think the firm has desirable dividend qualities. 

Unfortunately, the company is also exposed to some significant risks. Rising inflation could have a considerable impact on profit margins.

Higher interest rates may also increase the cost of debt for the group. The company often uses debt to fund acquisitions, and higher interest rates could reduce its ability to complete deals.

It may also face increasing competition from competitors that see an opportunity to expand in the market. Bunzl is a sector leader, but that does not guarantee the group’s continued success.

Even with these risks and challenges, I think the stock has an exciting destiny ahead of it, no matter what the future holds in 2022. I do not believe many other companies in the FTSE 100 offer such attractive growth potential. 

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Bunzl. 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.

Britain’s population is ageing, and rapidly. It’s a trend that Target Healthcare REIT is capitalising on.

This ‘nearly’ penny stock (which trades around 115p) owns and operates an estate of care homes. This part of the property market is massively undersupplied, and so rent levels at such facilities are moving continuously higher.

Target saw rents at homes that were subject to rent reviews rise 1.8% year-on-year on average in the 12 months to June. So its no wonder the business embarked on another £125m share placing and raised its debt capacity to continue building its property portfolio. I’d buy Target despite the threat posed by shortages of care home workers following Brexit.

A packaging powerhouse

Getting a slice of the e-commerce boom is a key investment strategy of mine. I’m thinking of improving my exposure to this retail revolution by buying shares in Macfarlane Group too. This particular cheap UK share makes the majority of its revenues by making protective packaging products. It sources the remainder from supplying custom-made boxes and designing and printing labels.

Macfarlane is one of the country’s leading operators in providing packaging products. This puts it in great shape to exploit what is Europe’s largest e-commerce market, one that continues to grow at a steady pace. I’d buy Macfarlane shares despite the disruption an economic downturn could cause to its operations. Today, the business trades at 137p per share.

Riding the construction boom

Strong housebuilding activity on these shores makes London’s listed brickmakers attractive buys, in my opinion. I already own shares in Ibstock and I’m considering buying Michelmersh Brick Holdings for my portfolio as well.

In its late November trading update, this particular operator (which changes hands at 128p) said that “we continue to see strong demand in our end markets from new housing” as well as from commercial regeneration projects and the repair, maintenance and improvement (RMI) market.

House construction looks set to remain elevated too, in order to meet demand that’s being supercharged by low interest rates and Help to Buy support for first-time buyers. I think Michelmersh is a great cheap UK share to own, despite the rising problem of worsening cost inflation.

Another penny stock I’d buy today

Speaking of top construction-related stocks, engineering services provider Nexus Infrastructure is also on my shortlist right now. This business designs, installs and hooks up essential infrastructure on new housing developments to keep residents supplied with gas, water, broadband and the like. And it’s doing a roaring trade at the moment thanks to strong build rates, with revenues rising 10% in the year to September.

Demand for Nexus’ services could wane if the Bank of England steadily raises interest rates and home-buy affordability takes a hit. A high-profile failure of its engineering products could also hit future business hard.

That said, I still think this UK share (which trades at 228p) looks attractive from a risk-reward perspective.

Royston Wild owns shares of Ibstock. The Motley Fool UK has recommended Ibstock and Macfarlane Group. 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.

I am currently following a strategy that I believe will allow me to build a passive income with £150 a week using stocks and shares. 

Equities are the perfect asset to build a passive income, in my opinion, because investors do not need a huge lump sum to get started. Indeed, thanks to the rise of free trading apps, investors like me can start saving for the future with just a few pounds every week. 

This is why I believe I can build a passive income stream by saving £150 a week. 

Stocks and shares for passive income

That amount, which equates to £7,800 a year, will not give me a passive income overnight. But it will form the foundations of what could potentially become a very lucrative portfolio in the long term. 

I will invest this money in high-income shares. Companies such as British American Tobacco, Phoenix Group and Legal & General are stocks that currently support an average dividend yield of around 7%. 

Assuming they do not generate any capital growth, this implies I can earn a return of £546 a year on my money. 

That is just the start. If I reinvest my dividend income back into this basket of shares, I believe I can build an investment pot of around £110,000 after a decade of saving. A dividend yield of 7% on this total could provide me with a passive income of £7,700 a year.

Of course, these are just estimates. There is no guarantee the companies outlined will maintain their dividends at current levels. A sudden drop in profitability could cause the firms to slash their distributions to investors, as happened last year when the pandemic crippled global economies. 

If these companies begin to reduce their dividends, I may have to seek out other income stocks. There are some other options, including Persimmon and Evraz but, like their peers listed above, the income from these corporations is far from guaranteed. 

Growth stocks for income

Still, as a way to build a passive income stream for life, I am comfortable using this strategy. Even if the companies I have picked for my portfolio start to reduce their dividend payouts, I can always look for income elsewhere. 

Another strategy I could use is to invest in growth stocks. These do not tend to support high dividend yields, but I can always create income by selling a number of shares each year. For example, if a growth stock returns 10% every year, I can always reduce the position by 10% to produce a synthetic passive income for my portfolio. 

So, all in all, these are the strategies I plan to use to generate a passive income from stocks and shares. Even if the dividend strategy does not produce the desired results, I can always shift to the capital growth strategy. 

Rupert Hargreaves owns shares of British American Tobacco. The Motley Fool UK has recommended British American Tobacco. 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.

Warren Buffett is considered to be the world’s greatest investor. He has earned this reputation thanks to his astute investment strategy and nose for finding and buying high-quality businesses over the past seven decades. 

Indeed Buffett, or the ‘Oracle of Omaha’ as he is also known, does not buy any old equities. He focuses his attention on a few key businesses which fit his tightly-controlled investment criteria. 

While he has never laid out precisely what he is looking for in any business, Buffett has provided investors with plenty of information to help them make their own educated decisions over the past few decades.

By looking at this advice, I can build some idea of the sort of stocks the Oracle might buy. This will help me compile a list of high-quality stocks to purchase for my portfolio as well. 

As such, here are the UK shares that I believe Buffett might be interested in today. He does not currently own any of the equities outlined below. 

Warren Buffett buys

The first two companies that I believe he would be interested in are Unilever and Tesco. I think he would own both because he has held Tesco in the past and nearly helped orchestrate a bid of Unilever several years ago. 

The investor sold Tesco after its accounting scandal and avoided the takeover of Unilever, due to valuation concerns. However, today Unilever is cheaper, and Tesco has put its past issues behind it. While there is a risk both companies could suffer a decline in profits due to the supply chain crisis, I think Buffett could be a buyer of both. 

I already own Unilever in my portfolio and would be happy to buy more. I would also be happy to buy Tesco. 

High-quality investment

Buffett likes to buy companies that have a unique competitive advantage, like Games Workshop. The producer of miniature war games figures has a devoted fan base and a vast intellectual property portfolio. Thanks to these qualities, the group has higher-than-average profit margins, as production costs are relatively low compared to the price it can sell its miniatures. 

The one downside of this as an investment opportunity is its valuation. Shares in Games Workshop look relatively expensive. This is one quality that may put Buffett off from investing in the business. Still, based on the qualities outlined above, I would be happy to add the stock to my portfolio. 

I also think he may be interested in a company like BP. This is not a traditional Buffett investment, but he recently acquired shares in US oil giant Chevron. This seems to be a bet on the oil market and low valuations across the sector. As I have noted before, I think BP looks cheap compared to its income and growth potential, although volatile oil prices are a risk.

So while this might not be a traditional Buffett investment, I would be happy to buy the stock for my portfolio. 

Rupert Hargreaves owns shares of Unilever. The Motley Fool UK has recommended Games Workshop, Tesco, and Unilever. 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.

I’m searching for the best low-cost stocks to buy this December. Here are two top, cheap UK shares on my shopping list.

Red metal mammoth

I think Taseko Mines (LSE: TKO) could prove to be a great stock for me to buy as electric vehicle sales explode.

According to the Copper Development Association, a vehicle running on an internal combustion engine tends to contain 23kg of copper. That compares with the 40kg that’s loaded into the average hybrid electric vehicle. Or the 83kg that sits inside a battery-powered car.

The copper Taseko hauls from Canada’s colossal Gibraltar mine will be needed in huge quantities to make these vehicles. That’s without considering the large amounts of the highly-conductive metal that’ll be needed to create a charging infrastructure for these vehicles.

Gibraltar is the fourth-biggest copper mine in North America and is expected to continue operating until 2038. Taseko also owns the low-carbon Florence Copper project in Arizona. This is on track to produce its maiden output in 2023. And it is looking to begin construction on the gigantic Yellowhead mine in British Colombia towards the middle of the decade. This Canadian asset’s proven and probable red metal reserves sit at an eye-popping 820m tonnes.

It’s all well and good sitting on blockbuster mining projects. But bringing their riches to the surface can be extremely problematic. Any development, construction and production issues could bring Taseko’s profits expectations crashing down. And with it the share price. Still, on balance, I think this UK mining share has plenty going for it.

Another dirt-cheap UK share I like

Companies are spending massive sums on marketing and advertising to recover the revenues lost during the global pandemic. Analysts are expecting such expenditure to keep rising in 2022 too, which bodes well for The Pebble Group (LSE: PEBB).

Through its Brand Addition and Facilisgroup divisions it sells a vast range of promotional goods to big corporations and allows SME promotional product distributors to peddle their wares.

Revenues at The Pebble Group rocketed 39.3% year-on-year in the first half of 2021, to £46.8m, as businesses turbocharged marketing spend. But this UK share is more than just a flash in the pan. It has built long-term relationships with global blue-chip companies. This means more than 90% of revenues are recurring, providing the company with excellent profits stability.

The promotional products market is growing rapidly as they enable firms to raise brand awareness at relatively low cost. The Pebble Group estimates that around 10% of total marketing spend is dedicated to producing logo-stamped T-shirts, mouse mats and the like.

I am aware that earnings at companies like this are highly sensitive to broader economic conditions. I’d therefore expect the recent recovery at The Pebble Group to suffer should the pandemic continue to worsen. Still, from a long-term perspective, I reckon The Pebble Group provides plenty of opportunity for lovers of cheap UK shares like me.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Many stocks have tumbled recently. Most recently, this has included several travel stocks, prompted by investor fears about the Omicron variant. But I’m more tempted by the beaten-down growth stocks. These have mainly fallen due to extremely high levels of inflation and slightly disappointing trading updates. Here’s one that I think is set to soar over the long term, and one that I’m staying well away from.

Buy the dip

Over the past month, Salesforce (NYSE: CRM) has fallen around 12%. This was mostly due to its trading update on Tuesday evening, where the forward guidance was rather underwhelming. Indeed, for Q4, the company expects revenues of around $7.3bn, yet earnings were forecasted to be slightly lower than analysts’ expectations. This had led to fears that growth is slowing, and this caused the Salesforce share price to fall around 10% on the day. It’s still up over 18% over the past year though. 

But while the prospect of slowing growth is a real risk for the company, I still think this dip offers a great time to buy. In fact, the company’s Q3 trading update did beat expectations, and full-year revenue is expected to be around $26.4bn. This is a 24% year-on-year rise, once again showing how the company’s strategy is paying off. After the acquisition of Slack, and due to the strength of its Customer 360 platform, it also expects revenue of $50bn by FY2026.

This means that, after the company’s recent drop, and based on the recent results, it has a price-to-sales ratio of under 10. For a growth stock, this is certainly not too expensive. If the company can deliver on its ambition to reach $50bn in revenues by 2026, the share price could soar. Therefore, I’m very tempted to add Salesforce stock to my portfolio.

A growth stock to stay away from?

Snap (NYSE: SNAP) has fallen back significantly over the past few months, as it missed estimates for revenue growth. This means that the Snap share price is over 40% off its recent high, and at the same price as it was a year ago. But this dip isn’t tempting me to buy.

Although Snap has been seeing tremendous growth over the past few years, there are signs this is slowing down. Daily active users in Q3 were 306m, which is a 23% increase year-on-year. But over 75% of 13-34-year-olds in the US, UK, Australia, France, and the Netherlands already use Snapchat, so I believe that it will be hard to attract too many new users. This is a bad sign for any growth stock.

Further, the company’s valuation seems very steep. In fact, using the company’s estimates of around $4bn of revenue for this financial year, it has a forward price-to-sales ratio of around 19. This is far higher than I would like, especially as it still has not managed to reach profitability.

Therefore, even though the company is continuing to invest in itself, and revenue growth is strong, I don’t think this justifies its lofty valuation. This means that Snap is a beaten-down growth stock I won’t be adding to my portfolio.

Stuart Blair has no position in any of the shares mentioned. The Motley Fool UK has recommended Salesforce.com. 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.

The NIO (LSE: NIO) share price has had a rocky ride over the past few weeks. Falling almost 9% yesterday, the electric vehicle (EV) manufacturer’s stock has fallen 38% year-to-date.

The resurgence of Covid-19 concerns is a driving factor behind the falling share price. As with many other industries across the globe, the EV sector was hit hard by supply shortages linked to the pandemic. In addition to this, the sector had already been suffering from the global semiconductor shortage, leading to NIO suspending production between March and April this year, causing a $60m loss.

This issue has plagued the firm more recently, with October car deliveries falling more than 65% from September to just 3,667, due to supply chain volatility. The Omicron virus variant may exacerbate these problems further, causing more manufacturing problems for it. This has been the case for the whole EV industry, with Tesla falling over 5% yesterday too.

Positive results

Although the Omicron virus poses a big concern for NIO, there are still some positives for the firm. For example, it announced on Wednesday that its deliveries for November totalled 10,878 vehicles. This is its best monthly total and over double the figure for November 2020. For now, this highlights that NIO is still growing quickly. If this continues then it could be a key driver behind the future growth of the share price.

In addition to this, Q3 results contained more positives for the firm. Vehicle sales increased 102% year-on-year and total deliveries reached their highest ever figure. In addition to this, vehicle margins reached 18% compared to 14% a year prior. Hopefully, this signals a move towards profitability for the firm.

Another positive that could boost the NIO share price, is the annual ‘NIO day’ which is coming up on 18 December. Here investors can expect to see new products and technologies from the firm, including two new models. Both are expected to be released in 2022.

Challenges ahead

Aside from the Omicron virus, NIO also faces some longer-term challenges moving forward. For me, the two main challenges are inflation and increased competition.

The US Federal Reserve has already announced it’s tapering its asset purchasing programme in order to control inflation. This is already starting to put weight on high valuation stocks, as investors rethink their strategies.

In addition to this, the intensely competitive EV market poses an increased risk for the firm. For example, Ford and General Motors have both announced setting aside billions of dollars for EV production. NIO will have to find new ways to stay competitive against these bigger, more efficient firms if it wants to stay afloat.

Overall, I think Omicron poses a short-term threat to the firm, highlighted by the fall in the NIO share price on Thursday. While I think NIO has a prosperous future, shown by encouraging growth and results, there are still challenges to overcome. I’m placing this stock on my watchlist for now.

Dylan Hood has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Please note that tax treatment depends on the specific circumstances of the individual and may be subject to change in the future.

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