A couple of FTSE 100 shares I reckon could boost my holdings exponentially are DS Smith (LSE: SMDS) and HSBC (LSE: HSBA).
Realistically speaking I can’t buy all the shares I want to. But I’ll be looking to buy both these stocks when I next can and here’s why I’m a fan!
DS Smith
DS Smith is one of the largest packaging businesses in the world. This may not sound glamorous, but when I think of the rising demand for packaging, there’s lots to get giddy about.
Should you invest £1,000 in Ferrexpo right now?
When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Ferrexpo made the list?
Over a 12-month period, DS Smith shares have fallen 13% from 342p at this time last year, to current levels of 295p.
Macroeconomic volatility caused by rising interest rates and soaring inflation has hurt many FTSE 100 stocks, including DS Smith.
These issues have created higher costs for raw materials as well as a cost-of-living crisis. They are ongoing risks that could dent performance, growth, and returns. The former can take a bite out of profit margins. The latter could hurt demand as people are able to spend less, therefore, DS Smith’s customers buy less packaging.
On the positive side, DS Smith’s global footprint and enviable market position should boost the business, especially once volatility cools. Just think of how many things need packaging. Consider the e-commerce boom as well as packaging for food and lots more. Demand for packaging is only set to rise in line with a growing global population.
Next, the recent share price drop has thrown up an opportunity to buy cheap shares. Trading on a price-to-earnings ratio of just eight, they look too good to miss. Plus, a dividend yield of 6% is higher than the FTSE 100 average of 3.8%. I’d be looking to reinvest my dividends to help grow my portfolio further. However, it’s worth remembering dividends aren’t guaranteed.
Despite the current economic malaise, I reckon DS Smith shares would certainly boost my wealth and holdings now and in the future.
HSBC
Global banking powerhouse HSBC doesn’t really need an introduction.
A meandering chart below will show you HSBC shares haven’t taken off in the past 12 months. However, they’re up 6% from 569p at this time last year, to current levels of 622p.
Macroeconomic issues as mentioned above have definitely hurt banking stocks, and benefitted them too. The benefit of higher rates has been increased income. The detriment has been more chances of defaults and credit impairments, which can be costly.
From a bullish perspective, HSBC’s position in the global banking ecosystem is enviable. However, I’m excited by its position in Asian markets. The Asian economy is set to explode in the coming years and HSBC is gearing up by investing in this area to help it capitalise. Now there is a risk that geopolitical tensions or economic downturns could derail this, so I’ll be wary and watching keenly.
Moving on, the shares look dirt-cheap to me on a P/E ratio of five, and a dividend yield of 5.6% looks well covered too.
Overall, diversification is a crucial part of my investment mantra. Adding one of the world’s leading banks to my holdings could help propel them to new heights.
