Trawling through the FTSE 100 index shows me many opportunities to snap up the biggest companies and hold them for the long term. I think I’ve found three good companies I can buy at the current time, based on the economic climate. Let’s take a closer look.
Flying into clearer skies
International Consolidated Airlines Group (LSE:IAG) has suffered greatly over the past three years. With flights grounded and borders closed, the airline conglomerate was completely pummelled by the pandemic restrictions. I bought some of its shares in the middle of the pandemic, in 2020.
Over the past year, the shares are down 32.67%, while in the last three months they’re down 20%. At the time of writing, they’re trading at 113p.
Its problems aren’t over yet, either. The group faces cabin crew shortages and the threat of strike action. Furthermore, surging oil prices have resulted in higher jet fuel prices.
However, the firm expects to return to profit after the second quarter of 2022, while forecasting that passenger capacity for this year will be 85% of 2019 levels.
Enjoying higher interest rates
Shares in HSBC (LSE:HSBA) are up 25% in the last year, though down 3% over the past month. They’re currently trading at 519p.
The global banking firm is currently benefiting from higher interest rates. In the UK, these have reached 1.25% and it’s likely they’ll rise even further. These are important when analysing bank stocks, because they largely dictate how much a bank like HSBC may charge for its loan and mortgage products.
While there’s the chance that higher rates might eventually deter people from taking on more debt, HSBC has already benefited financially from rate hikes. Between 2020 and 2021, pre-tax profits grew from $8.7bn to $18.9bn.
HSBC is a truly global company and, while this has many advantages, it may also make it more vulnerable to a variety of geopolitical issues in every corner of the globe.
A steely mining firm
Anglo American (LSE:AAL) has enjoyed higher profits in the past year as base metal prices have surged. However, the shares are down 14% in the past year and 28% in the past month. At the time of writing, they’re trading at 2,633p.
In 2021, revenue soared by 63% to $41.6bn on the back of higher commodity prices. The firm – a base metals miner and producer – saw its pre-tax profits more than treble to $17.6bn.
In addition, the business announced that it had extracted the first copper from its Quellaveco mine in Peru. This mine is forecast to produce around 300,000 tonnes of copper per year. This is promising, given that global demand for copper is set to increase. It’s a key component in products like electric vehicles, for example.
However, the company is always at risk from shrinking balance sheets due to cost inflation.
Overall, these three firms are all benefiting from favourable conditions. I’ll add these stocks to my portfolio in the next few days and top-up my IAG holding. Furthermore, I’ll keep a close eye on their performance with a view to buying more shares on market dips.