FTSE 100 shares: this is one of my top ‘buy’ ideas for 2021

The FTSE 100 is a stock picker’s index, in my view. Over the last 20 years, the index as a whole has risen less than 10%. However, those picking high-quality FTSE 100 shares have been able to do much better.

Here, I’m going to discuss one of my top FTSE 100 ‘buy’ ideas for 2021. I think this stock, which has been a member of the lead index since its launch in 1984 (and one of its best performers), has a lot of potential in the year ahead.

A top FTSE 100 share for 2021

The stock I like for 2021 is Reckitt Benckiser (LSE:RB). It’s a leading consumer goods company that owns a world-class portfolio of health and hygiene brands. Its products – which are sold in around 200 countries around the world – are trusted by millions of people globally.

The main reason I’m bullish on Reckitt Benckiser is that, as the owner of the Dettol and Lysol brands, it’s a key player in the hygiene space. And hygiene is a theme I expect to remain dominant in 2021 (and beyond).

As analysts at Barclays said recently: “There will be demand for places to be clean and also ‘show clean.’” Barclays believes increased focus around hygiene will be long-lasting and transformative for the industry.

With Reckitt Benckiser owning two major, well-trusted disinfectant brands, and recently launching a new division to help businesses improve their hygiene, I think the FTSE 100 company is well-placed to grow in the years ahead.

Uniquely placed

Recent results have shown Reckitt Benckiser has a lot of momentum at the moment. In October, for example, its third-quarter results showed group like-for-like growth of 13.3%, underpinned by continued growth in its leading global disinfectant brands.

As a result of this performance, the company advised that 2020 like-for-like net revenue is expected to grow “low double digits”, up from “high-single digits”, previously. “We are uniquely placed to help tackle the challenges the world is facing,” the company said at the time.

I’m expecting this momentum to continue into 2021.

Insiders have been buying

Aside from the hygiene theme, there are two other reasons I like this FTSE 100 stock right now.

The first is that, in recent months, top-level insiders have been loading up on the stock. Regulatory filings show that, in November, the CEO and the chairman spent around £750k on stock. This is a statement of confidence from these insiders. Clearly, they see the stock as being undervalued.

The second is that the company is relatively recession proof. No matter the state of the economy, people still buy its products. With Covid-19 lingering, I think Reckitt Benckiser can play a valuable defensive role in a portfolio.

I’m bullish on this FTSE 100 stock

Since August, Reckitt Benckiser shares have underperformed. There are a few reasons why. Firstly, Fundsmith recently announced it has completely sold the stock. Fundsmith’s a £19bn fund and, assuming RB was a 3% position, that means around £570m worth of stock was sold. This would have hit the share price. Secondly, the rising pound has impacted companies that have significant international operations.

I think this share price weakness has presented a fantastic buying opportunity. With the FTSE 100 stock now trading on a P/E ratio of about 20 and sporting a dividend yield of nearly 3%, I think the risk-reward proposition here is very attractive.

Edward Sheldon owns shares in Reckitt Benckiser and has a position in Fundsmith. The Motley Fool UK has recommended Barclays. 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.