Today, I’m searching for the best cheap FTSE 100 stocks to buy as volatility in share markets continues. Here are two I’d snap up today to hold onto until least 2032.
An emerging market star
I believe my shares portfolio wouldn’t be complete without some decent exposure to fast-growing emerging markets. One way I’m considering bulking up my presence here is to invest in HSBC Holdings (LSE: HSBA). A blend of rocketing wealth levels and low banking product penetration in Asia could deliver robust long-term returns for this FTSE 100 firm’s investors.
HSBC might be a global banking titan but it clearly sees its focus in Asia. A year ago it announced a five-year, $6bn investment programme on the continent that it believes will deliver “double-digit growth”. At the same time, the company is slimming its operations elsewhere as it realigns to these hot growth regions. This week, for example, HSBC announced plans to end its 40-year stay in Greece by selling its retail branches to local operator Pancreta Bank.
A FTSE 100 bargain
HSBC’s share price has dived 13% in the space of a month. It’s no mystery why as the tragic conflict engulfing Ukraine damages the global economy and sanctions on Russia bite. The war could have a negative by-product for the banks specifically, too, if economic conditions cause central banks to limit their ideas on raising interest rates.
Still, as a long-term investor, I see the recent descent in the HSBC share price as an attractive dip buying opportunity. I believe earnings here could rocket over the next couple of decades as investment in its wealth management and commercial banking units pays off. And today I can pick the FTSE 100 bank up on a forward price-to-earnings (P/E) ratio of 9.3 times.
One further thing: at current prices HSBC also sports a huge 4.4% dividend yield. This beats the broader FTSE average by almost a full percentage point.
10.1% dividend yields!
Rio Tinto’s (LSE: RIO) another FTSE 100 share whose share price has slipped in recent weeks. Despite super-heated commodity prices the global miner has fallen 6% in value since mid-February.
This means that Rio Tinto trades on an ultra-low forward P/E ratio of 7.2 times right now. What’s really grabbed my attention, though, is the size of the dividend yield at current prices. This sits at a mighty 10.1%.
Riding the commodity supercycle
Look, Rio Tinto’s earnings could slump if global growth forecasts are painfully downgraded and commodity prices correct. But I’d still buy the mining business because of its bright long-term profits outlook.
Demand for its iron ore is likely to grow as infrastructure spending picks up and urbanisation in emerging markets explodes. Copper consumption, meanwhile, looks set to surge as electric vehicle sales click through the gears. This explains Rio Tinto’s recent move to acquire the shares it doesn’t already own in Mongolia’s gigantic Oyu Tolgoi copper project.
Like HSBC, I fully expect the firm’s share price to rise strongly over the next 10 years. And I’d use recent share price weakness as an opportunity to buy in at a low price.
