I’ve trawled the FTSE 100 to find three stocks to buy. At the risk of sounding like a presenter on a TV shopping channel, I believe time is running out to snap up these bargains!
Building blocks
Against a backdrop of rising interest rates and a loss of confidence in the housing market, the Persimmon (LSE:PSN) share price has crashed 40% since July 2022.
And it’s performed worse than other housebuilders like Barratt Developments and Taylor Wimpey, which are down 12% and 10%.
That’s because it’s forecast to build 8,000-9,000 homes in 2023, which is far lower than its five-year average of 15,060. Its peers are expecting less of a drop.
And it’s slashed its dividend from 235p to 60p a share.
As gloomy as this sounds, I think this represents a good buying opportunity. The housing market is notoriously cyclical and I’m confident it will pick up over the next couple of years.
The company has no debt. And it’s purchased enough plots of land to keep it going for at least five years.
Also, its properties tend to be cheaper than its rivals and are therefore likely to be more popular with first-time buyers when the market recovers.
Getting technical
With the current spotlight on artificial intelligence — which Goldman Sachs claims could raise global gross domestic product by 7% — I think the case for investing in tech stocks is compelling.
Scottish Mortgage Trust (LSE:SMT) only invests in high-growth technology companies.
Over the past couple of years these have fallen out of favour as the global economy has slowed. That’s why the net asset value of the fund’s investments is currently 22% lower than its market cap.
For much of the past five years, the share price has been much closer to the value of its portfolio.
But the bursting of the ‘dot com’ bubble shows that this sector can be volatile. And some of the trust’s investments are in unlisted companies that can be difficult to value.
However, the sector still appeals to me for its long-term potential.
Don’t hang up
Airtel Africa (LSE:AAF) shares are currently only 4% above their 52-week low. And since 14 June 2023, they have fallen more than 20%, for no obvious reason.
The company’s results for the year ended 31 March 2023 showed an 11.5% increase in revenues year on year. And the total customer base is up 9% to 140m.
But it operates in an unstable part of the world where foreign currency movements can have a big impact — a 1% fall in the value of the Nigerian naira would reduce revenue by $22m.
And like most telecoms companies, it has a high level of borrowings ($2.18bn), although servicing this debt appears manageable given that it made a post-tax profit of $750m last year.
As the company is growing and steadily increasing its dividend, I think the stock offers good value at the moment. The fall in the share price has boosted the yield to 4.2%, slightly above the FTSE 100 average.
Regrets
I already own one of these stocks (Persimmon) and, unfortunately, I don’t have the funds to buy either of the other two.
But I fear by the time I am in a position to invest, I will get far fewer shares for my money than I would today.
