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FTSE 100 investing: 2 bargain buys I’d consider today

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Graph of price moves, possibly in FTSE 100
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A slew of FTSE 100 companies have released their results today, but investors are not impressed with all of them. Curiously enough, this is despite their posting decent results or their long-term prospects.

I think this makes it a good time to consider buying these shares at a bargain. Here are two of them. 

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#1. Hikma Pharmaceuticals: defensives drop

The FTSE 100 drug manufacturer Hikma Pharmaceuticals (LSE:HIK) turned in a broadly robust set of numbers for 2020 today. 

Its revenue is up 6% and operating profit has risen by 17%. It has also increased its dividend amount by 15%. Its earnings per share are down, but I would be more worried if this was reflected in the dividends, which it is not. Hikma is also optimistic in its outlook for 2021.

Yet, its share price is down almost 6% as I write. I reckon this is for two reasons.

One, defensives are out of favour. AstraZeneca, for example, is down 25% from the highs seen in July last year. Hikma too, has witnessed a broad share price softening since the market rally started. 

Two, in my observation it sometimes takes a day or two before the results’ impact shows up on the share price. I think that might be the case with Hikma, though other explanations are possible too. For instance, its operating profit is below analysts’ forecasts. We will know more soon. 

In the meantime, I think it is a good stock to buy. Actually, going by its financials, any time is a good time to buy it, but more so now when its share price is down.

There is, of course, the risk that defensives will remain out of favour as stock markets stay elevated. That would mean that its share price could continue to remain weak. 

But I see little chance of that happening. 

Hikma shares have a price-to-earnings (P/E) ratio of around 10 times right now. As other stocks start looking expensive, I reckon investors will circle back around to the likes of bargain buys like HIK.

#2. Mondi: FTSE 100 long-term play

The FTSE 100 packaging and paper provider Mondi (LSE: MNDI) released its results too, resulting in a small share price drop. Both its revenues and profits have been impacted in 2020, but I think of Mondi as a long-term play.

Its fortunes are tied to the online sales market, which is really the way we will shop in the future. Digital sales have boomed in 2020, acclerating the process. This has positively impacted companies from e-grocers like Ocado to warehousers like Segro. MNDI is no different, which could otherwise have suffered far more in a lockdown. 

I think over time it will benefit even more. Investors clearly think so too, going by the fact that its share price recently touched multi-year highs. Moreover, its P/E is still at 11 times right now, indicating that it is a bargain buy compared to many other peers. I think it will start rising again. 

The risk I see here is that MNDI is that it may take a while to get its financial act back together. Till then its share price could really languish. 

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Manika Premsingh owns shares of AstraZeneca and Ocado Group. The Motley Fool UK has recommended Hikma Pharmaceuticals. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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