Selecting the finest stocks from the FTSE 100 is an inherently subjective exercise, with investors varying widely in their risk appetites, objectives, and ethical considerations.
A structured elimination process can help cut through the noise, narrowing down the index’s constituents to only those that meet strict criteria across yield, valuation, and analyst sentiment.
The process begins by removing seven so-called sin stocks, covering energy, defence, and tobacco companies that many investors are unwilling to hold on ethical grounds.
Six miners are also dismissed early, given that their earnings tend to be far too volatile to meet the consistency standards required under this framework.
Telecoms companies and utilities follow them out the door, weighed down by high debt levels and returns on capital employed that lag most other industries by a meaningful margin.
Ten retailers are cut from contention as well, including 3i Group, given that 75% of the investment company’s portfolio value derives from Action, one of Europe’s largest non-food discount chains.
Eight companies exposed to residential and commercial property markets are also removed, with lack of growth and large borrowings presenting concerns that are difficult to overlook.
From the remaining 63 companies, a further 43 are eliminated for yielding less than the FTSE 100’s 3.05% average, followed by those with a historic price-to-earnings ratio above the index average of 15.
After also removing stocks without a consensus Buy rating from brokers, and cutting IG Group following a 22.6% share price fall on 2 October after a disappointing trading update, just three names remain.
Intermediate Capital Group, the alternative asset manager, has more than doubled its fee-related earnings per share over the past four years, with 11 out of 13 analysts currently rating it a Buy.
Specialist bank Investec has grown its earnings per share by 50% since 2021 and has cut its dividend only once in 18 years, despite its results being sensitive to broader macroeconomic conditions.
The third name on the shortlist is consumer health and hygiene company Reckitt Benckiser Group (LSE: RKT), which has grown its adjusted earnings per share by 22% since 2021 and improved its return on capital employed by four percentage points.
Reckitt Benckiser owns household names including Nurofen and Dettol, giving it a degree of defensive appeal since demand for painkillers and cleaning products tends to hold up regardless of economic conditions.
Potential risks for Reckitt Benckiser include a heavy reliance on 11 brands, which together accounted for 71% of revenue in 2025, alongside supply chain inflation that could squeeze margins going forward.
Despite these risks, none of the 21 analysts covering Reckitt Benckiser are advising investors to sell, with six rating it a Strong Buy and the consensus suggesting its shares are around 24% undervalued.
The company’s dividend yield of 4.3% also places it comfortably within the top 20% of FTSE 100 dividend payers, adding further appeal for income-focused investors seeking dependable returns.
Whether these three companies genuinely represent the very best the FTSE 100 has to offer is open to debate, and further research would be needed before committing capital to any of them.