Telecoms provider Airtel Africa (LSE: AAF) was a big FTSE 100 loser in June. Its share price fell a hefty 12% over the month as worries over runaway inflation heated up.
I don’t own this UK share. But at current prices I’m tempted to go bargain-hunting here. Today it trades on a forward price-to-earnings (P/E) ratio of 8.6 times.
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Airtel could also see demand for its products cool should the global economy struggle. It also faces big competition from larger industry players like Vodafone in its telecoms and mobile money markets.
But that’s not to say the business won’t continue to grow profits at a healthy rate. Mobile and financial product penetration is ultra-low and demand is rising sharply as disposable income and population levels steadily increase.
Indeed, City analysts think the company will grow annual earnings 12% and 16% in the financial years to March 2023 and 2024 respectively.
Last year Airtel grew its customer base almost 9% year-on-year to 128.4m people. The demographic factors that are supercharging telecoms sales will be in place for decades too. I think the firm could provide big shareholder returns over the long term.
Another FTSE 100 bargain
In a sea of scary economic data there was some good news for investors on Friday. In China manufacturing activity rose at its fastest pace for 13 months as Covid-19 restrictions unwound.
This is good news for commodities producers given the huge volumes of raw materials Chinese customers suck up. Take Rio Tinto (LSE: RIO) for instance. Strong demand from China in 2021 meant the country was responsible for around 57% of company revenues in 2021.
It would be premature to suggest the worst is over for mining stocks. Soaring inflation is a global problem that could come back to bite Rio Tinto and its peers hard. But news of accelerating factory activity is a reason for me as an investor to feel a little better.
14.4% dividend yield
I bought the FTSE miner last month because of its excellent all-round value for money. And it continues to offer plenty for bargain-hunting investors to sink their teeth into following its 15% share price decline in June.
Rio Tinto trades on a forward P/E ratio of 5 times today. Meanwhile its dividend yield for 2022 sits at a mighty 14.4%.
I think Rio’s a great buy irrespective of its uncertain near-term outlook. Over the next decade I think demand for its products like iron ore, copper, aluminium will soar as the next commodities supercycle gets under way.
And the company will have the financial clout to make the most of rocketing raw materials consumption through acquisitions and organic investment. This is the beauty of being one of the world’s largest mining companies.
