The FTSE 100 index dipped below 6,800 last week. But it’s moved higher since and sits just above 6,900 as I write.
To put those levels in context, the index was around 7,250 a year ago. So, it’s still well down. And I’m still finding a lot of good value among the stocks making up the index.
I’m inclined to hunt in the lower reaches of the index for smaller companies. There’s a fair chance that businesses with a lower market capitalisation will have a longer growth runway ahead of them. But that isn’t always true. And it’s important for me to carry out thorough research into a business before buying any of its shares.
And I have several shares from the FTSE 100 index on my list for further research right now. My aim is to find stocks that I can hold for the long term while the underlying operational progress unfolds in a business over the coming years.
Strong trading
For example, I like the look of DS Smith (LSE: SMDS), the UK-based provider of sustainable packaging solutions, paper products and recycling services worldwide. On 10 October, the company said trading has been strong and above management’s previous expectations.
Meanwhile, with the share price near 285p, the forward-looking dividend yield is above 6% for the trading year to April 2024. That looks attractive to me. However, it’s always possible for any business to miss its estimates.
DS Smith carries quite a bit of debt and the business operates in a competitive sector. And any future general economic downturn could adversely affect the company. Nevertheless, I think it’s a good candidate for me to research further with a view to holding some of the shares for the long term.
An agenda for growth
I’m also keen on Airtel Africa (LSE: AAF), the provider of telecommunications and mobile money services to the African continent. In fact, I liked it so much I bought some of the shares recently.
In July, the first-quarter results report trumpeted “double-digit revenue growth, margin and earnings progression and further strengthening of the balance sheet.” And looking ahead, chief executive Segun Ogunsanya said the directors are “confident” the company will continue to deliver on its growth strategy over the long term.
For the shorter term, Ogunsanya acknowledged inflationary pressures. However, Airtel Africa is well-placed to deliver growth “ahead of the market” this year. And cost efficiencies should support profit margin resilience.
We’ll find out more about the firm’s progress with the half-year report due on 27 October. Meanwhile, with the share price near 126p, City analysts are predicting a dividend yield around 6% for the trading year to March 2024. But of course, predictions can miss the mark.
One potential risk is Airtel Africa has a fair amount of debt on the balance sheet. And that could become problematic if trading conditions deteriorate. Nevertheless, I’m prepared to embrace the risks of share ownership. And I’m thinking of buying more Airtel Africa shares when I next get some spare cash.