2 FTSE 100 shares set for years of extensive growth

Charlie Carman analyses two FTSE 100 shares that have a strong presence in some of the world’s fastest-growing economies.

| More on:
Young brown woman delighted with what she sees on her screen

Image source: Getty Images

FTSE 100 shares derive around 75% of their earnings from abroad. Recently, I’ve been searching for stocks in the index that have significant exposure to emerging markets. I view these regions as key drivers of global economic growth in the future, propelled by population increases and burgeoning middle classes.

Here are two Footsie stocks I consider to be well positioned to capitalise on these trends.

Prudential

The Prudential (LSE: PRU) share price has struggled to sustain momentum since losing its UK and European businesses in October 2019 due to the company’s demerger from fellow FTSE 100 constituent M&G.

After spinning off its remaining US operations in 2021, the insurer now exclusively focuses on 15 Asian and eight African countries. It currently provides 18.6m customers with savings, health and protection solutions.

Source: Prudential Annual Report 2021

The transition came at a difficult time. Hindered by China’s ‘zero Covid’ policy and ongoing border closures between Hong Kong and the mainland, Prudential’s Hong Kong sales collapsed 27% in FY21. However, aggregated 16% sales growth in other jurisdictions did offset this.

Stringent coronavirus regulations remain a headwind, but the company’s long-term prospects look good to me. After all, the market is massive. Asia’s health and protection gap is estimated to be $1.8trn and over 80% of the Asian population has no insurance cover.

Prudential doesn’t lack ambition — it’s developing capacity to serve 50m customers by 2025. New Asia-based CEO Anil Wadhwani will spearhead these efforts from February next year.

Despite recent wobbles, untapped demand in the company’s key locations makes this FTSE 100 stock a tantalising investment prospect. I’d buy.

Airtel Africa

The Airtel Africa (LSE: AAF) share price has enjoyed substantial 81% growth over 52 weeks, although progress has come to a standstill in 2022. This company provides telecommunications and mobile money services in 14 sub-Saharan African countries.

A recent entrant in the FTSE 100 index, Airtel Africa boasts 128.4m mobile subscribers and 46.7m data subscribers to its name.

The business performed well across all of its regions in FY22. Indeed, the latest results marked an impressive 17 quarters of double-digit revenue and EBITDA growth up to 31 March.

Source: Airtel Africa Factsheet

Although the market penetration for mobile services in Africa is low, the company faces stiff competition for market share. For instance, Vodafone‘s mobile money service, M-PESA, is Africa’s largest fintech platform with over 51m customers. This is almost double Airtel Africa’s 26.2m subscribers for its equivalent service.

However, I do like the stock’s low price-to-earnings ratio, which is just above 10. The 3% dividend yield is handy, too. With strong brand recognition in the continent and a chunky market to take advantage of, Airtel Africa shares are a good buy for me provided the company can keep pace with its competitors.

FTSE 100 shares for the future

Emerging markets have risks and rewards. Political instability and volatile currencies can be stacked against faster economic growth anticipated in the developing world.

I believe investing in FTSE 100 shares with a strong presence in emerging economies, such as Prudential and Airtel Africa, adds important diversification to my portfolio as well as the prospect of competitive returns in the years to come.

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 considered so you should consider taking independent financial advice.

Charlie Carman owns shares in M&G. The Motley Fool UK has recommended Airtel Africa Plc, Prudential, and Vodafone. 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

Black woman using loudspeaker to be heard
Investing Articles

GSK shares plummet 15% in a week! What’s going on here?

GSK shares had a bad time last week. They're down 15% as investors' sentiment soured ahead of litigation proceedings in…

Read more »

Burst your bubble thumbtack and balloon background
Investing Articles

Stock market recovery: have all the bubbles now burst?

Asset bubbles keep on coming, and here's what I'm doing to navigate through them and invest for the stock market…

Read more »

Shot of an young Indian businesswoman sitting alone in the office at night and using a digital tablet
Investing Articles

How I’d invest £290 a month in UK shares for a passive income that beats the State Pension

UK shares can offer a lucrative path for passive income. Our writer considers a plan to double his State Pension.

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

3 of the best shares to buy now with £2,000

I reckon the best shares to buy now have strong growth in earnings and recent good news flow, such as…

Read more »

Young female analyst working at her desk in the office
Investing Articles

How I’m aiming for £500 a month in income from dividend stocks 

Here's my three-step plan for achieving a growing income from dividend stocks and three companies I'd use to help execute…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

UK shares are cheap! So why is Warren Buffett ignoring them and should you too?

Many British shares are trading cheaply and pay dividends. This is normally the hunting ground for Warren Buffett, yet he's…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

How I’ve increased my passive income by 600%

Finding the right opportunities can bring spectacular results. Here’s how our author has managed to increase his monthly passive income…

Read more »

Blue NIO sports car in Oslo showroom
Investing Articles

Could lithium shares make my Stocks and Shares ISA a goldmine?

Our writer is considering buying lithium shares for his Stocks and Shares ISA. Here, he outlines the decision process he…

Read more »