These are my high FTSE 100 picks as recession fears fade

International markets surged this week as fears of an impending US recession have been quashed. With the chance environment now feeling considerably calmer, I’m revisiting some FTSE 100 shares I’ve been hesitant to purchase.

GSK

I’ve been hemming and hawing about shopping for GSK (LSE: GSK) for therefore lengthy now it’s change into an inner joke with myself. I’ll most likely be within the 50-59 age bracket that its Arexvy vaccine was lately accredited for earlier than I lastly purchase!

It’s one of many few FTSE 100 mega-caps which have managed to elude my profile to date. However its latest Q2 outcomes positioned it firmly again in my crosshairs.

A 31 July report revealed gross sales up 13%, a 5.2% enchancment on analysts expectations. Subsequently, core working revenue rose 18% with earnings per share (EPS) up 13%. Future return on fairness (ROE) is now forecast to be 39% in three years. 

A promising possibility — however one urgent concern might derail the progress.

GSK’s Zantac drug stays the goal of a number of thousand US lawsuits alleging a hyperlink to most cancers. Regardless of one Illinois jury ruling the drug not accountable in a particular case, remaining trials in different states might drag on for years. Ought to it’s discovered accountable, compensation payouts might price the corporate dearly within the quick time period.

Nonetheless, I believe it’ll make an excellent long-term funding in my portfolio. So I plan to lastly purchase the inventory subsequent week.

Entain

On the opposite finish of the dimensions is Entain (LSE: ENT), one of many smallest-cap shares on the index. It hasn’t been on my radar so long as GSK however caught my consideration in the course of the latest Euros soccer event. Because the mother or father firm of Ladbrokes, it’s no shock the elevated betting exercise boosted its income.

It additionally lately posted interim outcomes for the primary half of the yr, with stronger-than-expected win margins for the Euros. Revenues rose 6% with underlying money revenue (EBITDA) up 5%. The share value rose 9% on the day of the announcement.

The sports activities betting and playing firm has had a tricky few years. Since September 2021, the shares are down over 70%. A swathe of acquisitions made beneath ex-CEO Jette Nygaard-Andersen didn’t assist its fortunes and left the agency with £3.7bn in debt. Inflation-weary shoppers with tight wallets most likely added to the woes.

Now on the mend, might the corporate be on observe to profit from a bolstered economic system? The looming risk of a recession has actually had me shrink back from extreme spending this yr. If we actually are within the clear, a number of small wagers couldn’t harm, proper?

Nonetheless, recession or not, Entain nonetheless faces challenges. Falling earnings imply it lately grew to become unprofitable, with destructive earnings per share (EPS). Regardless of this, it was assured sufficient to boost Q2 dividends to 9.3p from 8.9p. If that wager doesn’t repay, it could have to chop them once more — a nasty look. 

Furthermore, the corporate continues to be searching for a brand new everlasting CEO – which provides me pause.

Though this low value level is enticing, I’ll wait till administration is extra stabilised earlier than deciding whether or not to purchase the shares.