3 FTSE 100 Plays On The Africa Boom: Standard Chartered plc, Diageo plc and Unilever plc

Here is how you can buy into Africa’s boom with Standard Chartered plc (LON:STAN), Diageo plc (LON:DGE) and Unilever plc (LON:ULVR).

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

We have seen many stories about the resurgence of economies and the emergence of stock markets across what used to be called the developing world.

The BRICs are now a familiar part of the investing landscape, and have proved very good investments over the past decade. Then we have had the frontier markets: countries such as Turkey and Vietnam, which until now have been outshone by the BRICs, but which are now strong investments in their own right.

And amongst the frontier markets I would like to concentrate on Africa — a continent that is now growing and developing at quite a pace.

But how should you invest in Africa? Well you could chose a unit or investment trust, but an easier route is to invest in companies listed on the FTSE 100 which undertake much of their business in Africa.

So here are my FTSE 100 plays on the Africa boom.

Standard Chartered

Standard Chartered Bank (LSE: STAN) has had a difficult 2013. It sailed through the Great Recession unscathed, yet recently there has been the Iranian money-laundering scandal, and recent results have shown a slowing of the company’s growth.

Yet this is a company that has strong businesses in growing markets across both Asia and Africa. And the fundamentals of the company are solid: a P/E ratio in single figures, a juicy dividend yield, and a low level of debt. Over the long term, I expect this company to still grow.

The negativity around this company has pushed this company’s share price to bargain levels. I think this has created a buying opportunity, and as investors warm both to banks and to emerging and frontier markets, I expect Standard Chartered to move ahead strongly next year.

Diageo

Drinks company Diageo (LSE: DGE)  (NYSE: DEO.US) is a global company that is experiencing strong growth in emerging and frontier markets, including Africa.

Its earnings year-on-year are growing at a rapid rate as it leverages its world-leading brands, such as Johnnie Walker and Smirnoff, across the globe.

As wealth increases from Cape Town to Cairo, consumers are buying more luxury branded products such as those Diageo makes. The emerging and frontier market consumer boom is akin to the post-war consumer boom in the US and Europe. This has led to a share price which has been rising and rising.

This is a long-term trend that Diageo is well placed to benefit from. I think that Diageo will continue to increase profits into the future, and its share price could increase further.

Unilever

Much of what I have written about Diageo I could also write about Unilever (LSE: ULVR) (NYSE: UL.US), the Anglo-Dutch consumer goods company.

Most of Unilever’s products are now sold in emerging and frontier markets, and eventually most of its profits will be made there too. And its business in Africa is steadily growing.

As consumers have increasingly bought more expensive branded products, Unilever’s sales have been booming. Buying into Unilever is betting on the future growth of Africa, and the rest of the developing world.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

> Prabhat owns shares in Standard Chartered, but in none of the other shares in this article. The Motley Fool owns shares in Standard Chartered and Unilever.

More on Investing Articles

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

Here’s how to invest £180 per week in an ISA to target a £9,343 second income

By investing less than a couple of hundred pounds each week into an ISA, this writer thinks he could build…

Read more »

Investing Articles

Here’s how I’d invest £200 per month to target a passive income of over £7,100!

Christopher Ruane walks through the mechanics of putting a couple of hundred pounds each month into shares to earn passive…

Read more »

Young Woman Drives Car With Dog in Back Seat
Investing Articles

£9,000 in an ISA? Here’s how I’d aim to turn it into a £10,207 annual second income

Our writer highlights a high-quality ETF that he thinks could help lay a solid foundation for a sizeable future second…

Read more »

Buffett at the BRK AGM
Investing Articles

With a spare £30 a week, I’d use the Warren Buffett approach to building serious passive income!

By learning some lessons from billionaire investor Warren Buffett, this writer aims to build passive income streams using modest regular…

Read more »

Investing Articles

If I’d invested £10k in the FTSE 100 25 years ago, here’s what I’d have today

Has the FTSE 100 been a winner over the last 25 years? Muhammad Cheema takes a look at this and…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

I’d aim for a million buying just 9 or 10 shares

Our writer explains why he believes careful selection of not that many quality blue-chip shares could help him aim for…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

£7,000 in savings? Here’s how I’d aim for almost £2,000 a month in passive income

With only a few thousand in savings and £100 to invest a month, our writer considers a strategy to aim…

Read more »

Investing Articles

4 great purebred UK shares that don’t rely on the US economy

UK stocks or American shares? Despite fantastic performance from US markets in recent years, the answer may not be as…

Read more »