Should I Invest In These 5 FTSE 100 Shares?

LONDON -- To me, capital growth and dividend income are equally important. Together, they provide the total return from any share investment and, as you might expect, my aim is to invest in companies that can beat the total return delivered by the wider market.

To put that aim into perspective, the FTSE 100 has provided investors with a total return of around 3% per annum since January 2008.

Quality and value
If my investments are to outperform, I need to back companies that score well on several quality indicators, and buy at prices that offer decent value.

This series aims to identify appealing FTSE 100 investment opportunities and, during recent weeks, I've looked at Unilever  (LSE: ULVR  ) , Admiral Group  (LSE: ADM  ) , Croda International  (LSE: CRDA  ) , Burberry Group  (LSE: BRBY  ) and Bunzl  (LSE: BNZL  ) . This is how they scored on my total-return-potential indicators (each score in the table is out of a maximum of five):

Share

Unilever

Admiral

Croda

Burberry

Bunzl

Dividend cover

3

4

4

4

4

Borrowings

4

5

4

5

3

Growth

5

4

3

5

4

Price to earnings

2

3

2

3

2

Outlook

5

5

5

5

4

Total (out of 25)

19

21

18

22

17

There's a strong showing on the scoring from both Burberry and Admiral, but all five companies have their attractions.

Consumer goods
Unilever continues to power forward in its quest to become what the directors call "a sustainable growth company." You really can't argue with the figures. The recent full-year statement fizzed with desirable numbers, as the firm's stalwart brands, like Lipton, Wall's, Knorr, Hellman's, Omo, and Ben & Jerry's continued to hit the spot with the masses. Unilever's revenues aren't just big in Britain, though. Last year, the firm sold around €51 billion of products to more than 190 countries, with about 55% coming from fast-growing emerging markets. I'm looking to buy on the dips.

Car insurance
The board at Admiral has its sights set on expansion abroad. The fast-growing car insurer derived 87% of turnover by insuring U.K. cars last year, but the loss-making international car division turned over just 7%. A further 6% came from other businesses, mainly the firm's well-known comparison website, Confused.com, but also including a fledgling U.K. household insurance division launched in December. There's much to do if the boards' goal is to be realized, but past performance suggests that Admiral could do well with its expansion plans, despite the inherent cyclical nature of insurance-company profits generally. I'm watching with interest.

Specialty chemicals
The chemical business has been booming for Croda, and that looks set to continue, which could lead to decent investor total returns from here. The firm enjoys an international customer base for which it uses a variety of technologies to manufacture a range of oleochemical and speciality products, used as ingredients, additives, or processing aids. Such activity sees the company involved in things like crops, personal and health care, lubricants, coatings, leather and fibre finishes, and surfactants. I'm going to keep an eye on Croda for an attractive entry point.

Fashion brands
The fast-growing Asia Pacific region now accounts for around 41% of sales at Burberry. That's exciting. If the firm's iconic English-check pattern catches on in the East, as indeed it seems to be, the potential based on population numbers is staggering. Burberry has a fine-tuned plan for growth, which aims to capture even more of that Eastern promise, and a new chief operating officer is rolling his sleeves to do his bit toward the company's mission. I'm encouraged to buy Burberry on the dips.

Specialist distribution
Bunzl's most important market is North America, which delivered 54% of overall revenue last year. The firm earns its living by supplying things like food packaging, cleaning supplies, and safety products to customers like food processors, supermarkets, retailers, and convenience stores. It's generally the stuff that those businesses consume themselves, rather than sell. Bunzl's outsourcing-service solution has proved popular, and the company has seen steady growth, both organically, and by acquisition. Continued expansion looks set to continue, which makes the firm's total-return prospects look interesting. Bunzle is on my watch list.

Action plan
These five shares have potential to generate decent total investment returns if bought at sensible prices. I'm also considering those contained in a new Motley Fool report called "5 Shares to Retire On," which highlights five shares with seemingly impregnable, moat-like financial characteristics, which our top analysts urge you to consider for your long-term retirement portfolio. They are shares that deserve consideration for any investor aiming to build wealth in the long run. For a limited period, the report is free. To download your copy now, click here.

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