2 of the best shares to buy now!

It can be difficult to find the best shares to buy now, but I’m looking to telecommunications and mining for growth.

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Key points

  • Vodafone has increased its free cash flow 
  • Fresnillo continues to grow profits
  • Both are showing signs of post-pandemic recovery 

Like many investors, I’m eager to find the best stocks with which to grow my portfolio for 2022. I’ve found two that I think should do great things for me this year. These two shares, Vodafone (LSE: VOD) and Fresnillo (LSE: FRES), give me exposure to the telecommunications and metals sectors. Why do I think they are the best shares for me to buy now? Let’s take a closer look.

Telecommunications recovery

A mobile telecommunications company, Vodafone has a presence in Europe and Africa. I like this stock because it is profitable and growing this profit year by year. For the fiscal year (FY) 2021, Vodafone bagged a profit before tax of €4.4bn.

As a potential shareholder, I find this impressive, especially when this figure was a mere €795m the previous year. For me, this is a strong indication that the stock is recovering after the pandemic and I think now is a good time for me to buy shares.

What’s more, the first-half report of FY22 lifted earnings guidance by €200m to €15.2bn. Indeed, free cash flow (FCF) increased by €100m to €5.3bn. These figures are of course good signs and suggest that Vodafone is enjoying a period of growth after the pandemic. This recent track record makes it look like one of the best shares for me to buy now.

On the flipside, Vodafone’s debt pile stands at €44.3bn. Its debt-to-equity ratio is 1.66, slightly above the industry average of 1.28. While this is not ideal, I believe the growth achieved in the post-pandemic recovery will alleviate the pressure on Vodafone caused by its debt.

A silver miner – one of the best shares to buy now?

Fresnillo, a silver miner operating in Mexico, is naturally vulnerable to the underlying commodity price. Just last week, silver fell 6.1% on talk of a rate hike by the US Federal Reserve in March 2022. While most assume that precious metals fall when rates climb, this correlation is actually historically weak.

The company is also consistently profitable and growing with each year. In the calendar year 2020, for instance, profit before tax was $551.25m. This was up from $178.75m the previous year.

In a recent trading update from January 2022, however, Fresnillo lowered production guidance. This is chiefly due to a rise in Covid-19 infections in Mexico and new labour laws in the country.

The labour laws mean that the company is increasingly turning to contractors and is having to work harder to keep its absences low. This news recently led RBC to downgrade Fresnillo. For me, though, I view these as short-term issues that should subside soon.

Both of these stocks may be ideal for growth. They are profitable and should emerge stronger after the pandemic. While challenges remain for both companies, I truly believe that they are two of the best shares to buy now. I already own Fresnillo stock and will be buying more at these low levels, in addition to new Vodafone shares.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Andrew Woods owns shares in Fresnillo. The Motley Fool UK has recommended Fresnillo and Vodafone. 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.

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