2 FTSE 100 stocks I'd buy in January

Updated: 
BAE Systems

Housebuilders have had their ups and downs since the results of the EU referendum came through and recent updates have seen them on a high. Despite Taylor Wimpey(LSE: TW) striding to seven-month peaks in recent sessions, I believe the share has the potential to keep charging as the steady flow of positive industry data continues.

On Thursday Persimmon (LSE: PSN) released yet another bubbly statement on the state of the sector, advising that "sales reservations through the autumn season were strong with healthy customer demand for new homes." The company once again lauded the impact of sympathetic mortgage rates on boosting homes demand.

Unsurprisingly the news sent shares of Taylor Wimpey et al spiralling higher again. And I reckon the company's own market update -- scheduled for Wednesday January 11 -- could prompt a fresh move higher.

And Taylor Wimpey's ultra-low valuations provide plenty of incentive for stock pickers to keep piling in. Despite predictions of a rare 4% earnings slip in 2017, the construction play deals on a P/E ratio of just 10.2 times.

And I reckon predictions of an imminent bottom-line fall could be due for an upward revision should market signals remain upbeat, lending further strength to the share price.

On top of this, Taylor Wimpey also blasts the majority of the FTSE 100 out of the water in the dividend stakes. For this year a 16.8p per share payout is currently predicted, resulting in an eye-watering 8.3% dividend yield.

I reckon Taylor Wimpey remains a great long-term pick for bargain chasers as buyer demand looks set to keep on outpacing housing supply.

Set to fire?

I also believe defence colossus BAE Systems(LSE: BA) could be in line for a fresh attempt at November's record peaks above 600p per share.

The London company's expertise in a wide range of fields -- from building submarines and training simulators to helping governments in the fight against cyberterrorism -- has made it a critical supplier to the US and UK militaries for an age now.

And in an age of rising Russian and Chinese arms expenditure, not to mention an increase in the number of terrorist activities across Europe, demand for BAE Systems' wares is likely to keep growing.

The defence play can also look to pounding economic growth in emerging markets to help deliver strong earnings. Last month the Jane's Defence Budgets report indicated that India -- a country where BAE Systems has an established hub -- became one of the top five biggest arms spenders in 2016.

A predicted 9% earnings surge in 2017 leaves BAE Systems dealing on a P/E ratio of just 13.9 times. And an anticipated 21.8p per share dividend yield a bulky 3.7%.

I believe the revenues outlook for the likes of BAE Systems remains extremely rosy, and reckon the stock is particularly attractive at current prices.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.