FTSE 100 stocks have pushed upwards since the turn of the year — the index is up 6% since 1 January. But I still believe that there are undervalued blue-chip stocks for me to snap up.
So, here are two stocks I’m buying before the end of the month.
Barclays
I already own Barclays (LSE:BARC) stock. But on Wednesday morning, Barclays shares fell nearly 10%, and this, to me, seemed somewhat of an over-reaction from the market.
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The stock fell following a disappointing trading update. The bank posted a pre-tax profit of £7bn in 2022, down from £8.2bn a year earlier and missing estimates of £7.2bn.
A major reason for the falling profits were impairment charges — £1.22bn against a net release of £653m the year before — and $361m in charges relating to securities sold in error.
Returns on equity at Barclays’ international division fell to 10.2% from 14.4% a year earlier on lower fee income.
Meanwhile, the net interest margin (NIM) — essentially the difference between lending and savings rates — increased to 2.86% from 2.52%. Investors might have expected this to be a little higher. Barclays is targeting a 2023 NIM of more than 3.2%.
However, I’m still pretty bullish on Barclays, and I’m buying more as the stock drops. Pre-tax profit only missed estimates by 2.8%, and I’m happy to see the dividend increase — pushing the forward yield to around 4.3%.
Moreover, it’s worth remembering that Barclays has used a consistent hedge strategy for several years in an effort to smooth the impact of the interest rate changes on NIM. I’m not only expecting to see increase rate tailwinds in the near term, I’m anticipating it to continue pushing revenues up over the coming years.
And, with inflation looking particularly sticky in the UK, interest rates could remain higher for longer.
Airtel Africa
Airtel Africa (LSE:AAF) is a multinational company, majority owned by the Indian telecommunications group Bharti Airtel. It provides telecommunications and mobile money services in 14 countries in Africa.
By virtue of its geographical focus, and the adoption of mobile money solutions, Airtel has impressive growth potential. Less than half of adults on the continent have a bank account and the industry is ripe for development.
The firm trades with a price-to-earnings ratio of nine after a recent rally. That’s nearly half the FTSE 100 average of 14. It’s pretty low when you consider that growth stocks tend to trade with higher multiples.
The dividend yield isn’t world-beating, but the 3.3% is certainly better than many growth-focused stocks.
I’ve been keeping a close eye on the share price, hoping to buy in during a dip. However, over the past two weeks, the share price has steadily gained. Despite this, the stock is down 12% over the year, and I’m looking to buy before the end of the month.
