I’ve always used market slumps as an opportunity to buy high-quality shares at discounted prices. And this time is no different. I’ve bought these two FTSE 100 shares that I believe to be well-positioned for the future with strong fundamentals.
African telecommunications
Airtel Africa (LSE:AAF) is a telecommunications and mobile money company with 118.2m customers in 14 African countries. The company aims to connect a continent that struggles with large distances between communities and poor infrastructure.
The FTSE 100 company saw a 14.2% increase in revenue in 2021 with the three key services of voice, data, and mobile money all growing. It was noted in its recent annual report that, “Mobile and digital penetration is low and populations are young and growing fast“. This shows there remains considerable growth opportunity within the sector. The company is the market leader in the majority of the countries it operates in, which puts it in a great place to reap the rewards from this growth.
Some challenges lay ahead for this FTSE 100 company. Due to the scale of Africa, there are challenges in connecting remaining isolated areas to mobile and data networks. The costs of adding an extra person to the network will continue to rise, which will put a strain on profits.
The shares currently trade with a price-to-earnings ratio of only 9.9, which is better than the majority of FTSE 100 shares. I’m excited by the growth opportunities that lie ahead for the company, which is why I added this company to my portfolio.
A FTSE 100 engineer
Spirax-Sarco (LSE:SPX) is a British engineering giant with a global presence in several niche industries. The company manufactures steam systems, peristaltic pumps, and electric heating units. This isn’t going to get anyone’s heart racing. However, I don’t mind that. I think that ‘boring’ shares are often overlooked. The shares are down 33% in 2022.
Spirax-Sarco coped well with the pandemic with revenue only falling 4% from £1.24bn in 2019 to £1.19bn in 2020. Revenue reached £1.34bn in 2021 with the company reporting a record operating profit of £340.3m. Alongside this, 50% of revenue comes from equipment maintenance. As industrial customers can’t just decide not to maintain their equipment, this has given Spirax-Sarco a resilient income stream.
However, there are a few upcoming challenges. Lockdowns in China have left a Shanghai factory running at lower capacity, which could leave customers with longer order waits. Alongside this, rising inflation is causing its own challenges. Demand for new machinery may drop as companies try to cut down on costs.
The shares are currently trading with a price-to-earnings ratio of 34 and a dividend yield of 1.27%. I wouldn’t consider this incredible value compared to some other FTSE 100 alternatives.
Overall, I think the positives still outweigh the negatives. The company has shown incredible resilience over the last few years and I see this set to continue. That is why I added Spirax-Sarco shares to my portfolio.
