March’s stock market crash has been followed by an impressive recovery. But I think there are still some bargains out there. In this piece I want to talk about four companies I think could be the best FTSE 100 shares to buy now.
This stock looks too cheap to me
When a company has been trading successfully for 155 years and has a market value of £76bn, I think it’s pretty safe to assume that it will survive most crises. The company I’m talking about is FTSE 100 banking giant HSBC Holdings.
The bank is suffering at the moment due to fears of a global slowdown and the risk that the war of words between China and the US will disrupt trade. I think these temporary problems have created a buying opportunity — HSBC shares look seriously oversold to me.
City analysts expect earnings to bounce back next year. Their predictions value the shares at nine times forecast earnings, with an expected dividend yield of more than 7%. I rate HSBC as a FTSE 100 share to buy today.
We can’t live without it
Love it or hate it, packaging is an essential part of modern life. Packaging firms are unloved by the market at the moment, but I think they offer good value. My pick of the big players in the UK is international group Mondi, which has a track record of generating strong returns for investors.
Double-digit profit margins and a sensible balance sheet suggest to me that this business will bounce back strongly in 2021. Analysts’ forecasts put the stock on 12 times 2021 earnings, with an expected dividend yield of 4.2%. I’d buy.
A FTSE 100 share I’d buy now
My next pick is a UK-focused business that I rate as the best in its sector. London-focused housebuilder Berkeley Group Holdings has a track record of timing the market brilliantly. The company is still chaired by founder Tony Pidgley who has built it into a £5bn business.
Investing in the UK housing market today isn’t without risk. But the London market usually recovers before the rest of the UK. This suggests to me that Berkeley’s planned developments could deliver strong results over the next few years.
Berkeley ended last year with £1bn in net cash and has confirmed its plans to pay a dividend this year. Market forecasts suggest a yield of 3.5%, rising to 5.5% in 2020/21. I see the stock as a long-term buy.
Diamonds are forever
FTSE 100 miner Anglo American is suffering more than most rivals from the global lockdown. The group is one of the world’s largest diamond miners, through its De Beers subsidiary. But diamond sales have slumped in lockdown, as jewellers have been forced to shut up shop.
Other key commodities produced by the group include copper and platinum. Sales of both metals have suffered this year, but I expect demand to recover over the medium term.
Anglo shares trade on about 12 times forecast earnings and promise a 3.5% dividend yield for 2020. When compared to the dividend devastation elsewhere in the market, I think this makes Anglo a FTSE 100 share to buy now.