I believe packaging and paper business Mondi (LSE:MNDI) is one of the best stocks to buy now for my portfolio.
Paper and packaging giant
Mondi is a British multinational packaging and paper company that employs approximately 26,000 people with a presence throughout the world. It has benefited from the recent e-commerce boom, which has created greater demand for packaging solutions.
As I write, shares in Mondi are trading for 1,850p. A year ago, shares were trading for 1,686p, which is a 9% return over 12 months. The Mondi share price is down approximately 10% in the past two months. This is mainly due to market sentiment linked to macroeconomic activity such as inflation and rising costs. In my opinion, this dip is an opportunity to add one from my best stocks to buy list at a better price.
Why I like Mondi
- Mondi has seen demand for its products increase in the past few years, especially since the pandemic began. This is linked to the rise of e-commerce and online shopping, and the need for sustainable packaging solutions. The pandemic meant many of us could only shop online, which boosted Mondi further.
- Like most of my other best stocks to buy now, Mondi has a good track record of performance. I understand that historic performance is not a guarantee of the future but I use it as a good gauge nevertheless. In addition, Mondi shares could make me a passive income. It currently has a dividend yield of just over 3%.
- Mondi’s chairman recently purchased a further £100,000 worth of shares. I am buoyed when insiders are buying shares. This is because the people who are in charge of guiding a business to success are willing to put their own money at risk and they are best placed to know if it will pay off. Furthermore, their interests are aligned. If Mondi does well, they increase their return as a shareholder too.
- There has been a rise in environmental, social, and corporate governance (ESG) investing recently. As a packaging and paper firm, Mondi has adopted ESG practises, which is pleasing to see. I am not an avid ESG investor but this is a bonus when a firm that can impact the environment with its products decides to ensure it is being responsible.
The best stocks to buy now have risks too
Recent inflation worries means there is a potential for rising costs throughout Mondi’s business. This could hurt it as it may need to raise prices and its customers may not like or even accept that. Furthermore, the recent supply chain crisis could hurt its prospects in the UK but it can mitigate this as it has a vast global network and customer base.
Overall I do believe Mondi is an excellent FTSE 100 option for my portfolio. It sports a forward price-to-earnings ratio of just 15 making it cheap in my opinion. It has many good characteristics but more importantly, I believe it could be about to see its share price rise as full-year results for the year ending December 2021 are expected shortly after.