1 FTSE 100 growth stock to buy and hold for 10 years

The FTSE 100 stocks has long been on Manika Premsingh’s investing wishlist, and now is the time when she is actually ready to buy it. Here’s why. 

| 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.

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.

Plenty of FTSE 100 stocks could make great buys for my portfolio right now. But one has stood out for me for some time now. I am talking about the packaging provider Smurfit Kappa (LSE: SKG), which caught my attention once again when it released its full-year results for 2021 earlier this week. Both its revenue and earnings showed robust growth of 18% and 16% respectively. And it also has a positive outlook for 2022. 

Relatively cheap FTSE 100 stock

This only adds to its good financial performance in the past. It is little wonder then that in the past five years, the stock has almost doubled. And going by its relative price, I reckon it could rise even further. It has a price-to-earnings (P/E) ratio of 19 times, which is just north of the FTSE 100 P/E of 17 times. I expect that this gap could widen over time though, going by Smurfit Kappa’s prospects. 

Structural shifts in its favour

As an e-commerce stock, it might have been helped by the recent spurt in online shopping. But I do not believe that it was a one-off increase, but has in fact accelerated a structural shift in its favour. Moreover, as the economy continues to recover, consumer spending is quite likely to keep rising. Just today, numbers for the UK economy were encouraging. Growth for 2021 came in at 7.5%, a bounce back after the slump we saw in 2020. 

Inflation is a stumbling block

Of course inflation could play spoil sport, holding back consumers’ ability to buy more as everything becomes more expensive. The company has also mentioned “unprecedented cost inflation” in its update, which reflects that high prices could hurt int two ways. But over the long term, say 10 years, inflationary trends are likely to even out. And that is the kind of holding period I have in mind for buying the stock.

As I see it, the e-commerce sector can show a whole lot of growth in the next few year and stocks like this one will only gain because of a boom in online spending. This is especially so because it is geographically diversified. This means that even if some of the more developed markets become saturated over time, it can potentially continue to find new pockets of growth. 

Analysts are bullish

Interestingly, just to see if my opinion is shared by others, I checked on the forecasts for the stock. Turns out that all five analysts whose share price targets have been compiled by the Financial Times expect its price to rise in the next 12 months. The rise isn’t expected to be anything spectacular. The most optimistic see it at 13%, but that is not too bad, I believe. And if continued, could result in some pretty decent gains over the years. 

These forecasts could change if the circumstances change, of course. But for now, I see a very good chance that Smurfit Kappa’s stock will continue to do well. I have already waited for too long to buy it, and now I think it is finally time to do so. 

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.

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

More on Investing Articles

British bank notes and coins
Investing Articles

Should I buy M&G shares for the 9.8% dividend yield?

With the M&G dividend yield close to double digits, this existing shareholder explains why he'd happily buy more of the…

Read more »

British Isles on nautical map
Investing Articles

This cheap UK stock could rise 30%, the City says

Analysts covering Serco Group shares reckon they could rise by over a quarter. But is this UK stock a good…

Read more »

2024 year number handwritten on a sandy beach at sunrise
Investing Articles

Here’s how I’d aim for a million by investing £45 a day

Christopher Ruane thinks putting £45 a day into blue-chip shares could help him aim for a million. Here are some…

Read more »

Light trails from traffic moving down The Mound in central Edinburgh, Scotland during December
Investing Articles

I’d buy FTSE 100 shares in December before the next stock market rally!

Christopher Ruane explains why he would happily snap up cheap FTSE 100 shares between now and the end of the…

Read more »

Businesswoman calculating finances in an office
Investing Articles

6% yield and 8% annual revenue growth! A passive income opportunity

Why not have the best of both worlds? Our writer explores a passive income opportunity with a 6% yield, bolstered…

Read more »

Group of young friends toasting each other with beers in a pub
Investing Articles

I’ve been loading up on this FTSE 250 share in November!

Christopher Ruane explains why he's been adding even more shares in this well-known FTSE 250 name to his portfolio this…

Read more »

One English pound placed on a graph to represent an economic down turn
Investing Articles

Down 30%, these cheap shares are on sale!

Cheap shares don’t mean anything to our analyst unless there’s real value in what he’s buying. Let’s see his Foolish…

Read more »

Photo of a man going through financial problems
Investing Articles

I can’t believe how far these FTSE 100 shares have fallen!

While the FTSE 100 is up 0.7% over six months, these five Footsie flops have collapsed 26% to 40%. But…

Read more »