Over the past several days, the FTSE 100 index has been stuck in a tight range. Domestic news may have highlighted that July business activity in the UK grew at its fastest pace in five years. However, market participants are concerned about rising Covid-19 numbers worldwide, as well as tensions between the US and China.
Therefore today I’ll discuss two FTSE shares that may be appropriate for long-term portfolios, especially for Stocks and Shares ISAs, even if there are further pressure on broader markets in the coming weeks. Let’s take a closer look.
FTSE mining giant
Chile-based FTSE 100 member Antofagasta‘s (LSE: ANTO) core business is mining, representing over 96% of revenue and EBITDA.
As it operates four mines in Chile, the company benefits from increases in the price of copper, but that declined between 2010 and late 2016. And the share price of this FTSE mining giant mirrored this decrease. Yet between 2017 and early 2020, despite volatility, both the the price of copper and ANTO shares overall increased.
However, this year as markets plunged and countries, including Chile, went into lockdown, prices of copper and Antofagasta shares took a hit. Since then, both have improved considerably. In fact, on 27 July, the stock hit a 52-week high.
On 22 July it released a Q2 update that showed a drop in production during the quarter. Management now expects to meet the lower end of its full-year guidance. CEO Ivan Arriagada summarised that despite Covid-19 challenges “net cash costs at $1.12/lb are some 6% lower than last year as a result of the weaker Chilean peso, lower input costs and continued tight cost control”.
I believe his words highlight the proactive stance of management, which has helped the group weather numerous headwinds in the past. Due to the recent rapid increase in price, trailing price-to-earnings sits at 25.77, which is a bit on the high end for the industry.
In the coming weeks, there may be some profit-taking in FTSE shares, including ANTO, which would give a better entry price for investors. I’d consider buying it in an ISA, especially as the price goes towards, or even below, 1,000p.
Financial security in retirement years
Many financial planners highlight the importance of diversification to grow one’s savings, especially for later years. Now could be an opportune time to build a diverse Stocks and Shares ISA made up of high-quality businesses.
Security outsourcing group G4S (LSE: GFS) offers a range of services and products, including the supply of security personnel, secure transportation of individuals, and risk management solutions. FTSE 250 member G4S also works with governments overseas to deliver security and forensic medical services.
On 23 July, the group announced half-year results for the period to June. Revenue and EPS were £3.35bn and 6.3p respectively. Operating cash flow came at £364m, marking a significant increase from £164m in 2019.
The group has been increasing its focus on integrated technology-enabled solutions. Management highlighted it was “generating an increasing proportion of revenues from integrated, technology-enabled solutions”, which it expects to help accelerate profitable growth.
Earlier in April 2020, in order to conserve cash amid the uncertainties in the current environment, the company cut the final dividend payment. Year-to-date, GS4 shares are down around 33%, hovering at 147p. Its forward P/E and P/S are 12.60 and 0.31 respectively. I’d buy the dips.
