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I’m always on the hunt for high-quality FTSE 100 shares at an attractive price. These three have all slipped in recent months, but in my view have the potential to deliver share price growth and dividends for decades. I think they’re well worth considering today.
Reckitt shares have slumped
Consumer goods group Reckitt (LSE: RKT) is a huge global operator. Every day, more than 30m people in nearly 200 countries buy its household, health and personal care products such as Dettol, Finish, Nurofen and Durex.
It was always seen as one of the more solid long-term income and growth blue-chips, until its disastrous purchase of Mead Johnson Nutrition in 2017 triggered a blizzard of US lawsuits over its premature baby formula. Adjusted operating profits have been pretty flat too.
- 2025 – £3.54bn
- 2024 – £3.48bn
- 2023 – £3.37bn
- 2022 – £3.45bn
- 2021 – £3.11bn
The Reckitt share price is down 30% over five years. It was making headway this year, but its shares have plunged again on Iran war worries and a soft outlook.
There’s a good business here, and the shares could kick on when the cyclical consumer market swings back in its favour. With a modest price-to-earnings ratio of 12.6 and a dividend yield of 4.75%, today could prove a handy entry point.
3i Group has taken a beating
Private equity specialist 3i Group (LSE: III) is arguably a victim of its own success. It built its reputation by buying businesses, sorting them out and selling them on. But then one investment did so well it began to dominate the entire portfolio.
Discount retailer Action has turned into a pan-European giant, with more than 3,300 stores across the continent. Today, it makes up 70% of the 3i portfolio. It was growing so quickly that all it took was the slightest hint of a slowdown for 3i shares to crash. After years of outperformance, the shares have plunged 50% in a year. Incredibly, it’s the worst performer on the entire FTSE 100 in that time. And that’s despite delivering a healthy 22% return on shareholder funds.
The investment trust now trades at a massive 30% discount to the underlying value of the assets it holds. 3i is likely to remain bumpy for a while, but has long-term potential for investors comfortable with a bit of risk.
Babcock retreats
Babcock International Group (LSE: BAB) also raced ahead of itself. The shares rocketed as investors poured money into the defence stocks, pushing its price-to-earnings ratio towards 30. But it’s dropped 25% in the last three months. That’s partly due to a £140m hit as costs on its Type 31 frigates overran, combined with some profit taking. Today, it’s P/E is down to 20. Not dirt-cheap, but better value than before.
Babcock’s latest trading update (13 May) showed underlying operating profit up 19% to £433m. Free cash flow jumped 71% to £262m. With a hefty £9.6bn order backlog, roughly twice last year’s revenue, I’m hoping the shares will power on once the sector swings back into favour.
Should you invest £5,000 in Reckitt Benckiser Group Plc right now?
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Harvey Jones owns shares in 3i Group.
This story originally appeared on Motley Fool
