The first thing I’ll say about my investing mantra when it comes to FTSE stocks is that I always buy with a long-term view. I’d define this as a five- to 10-year period.
Let me explain why I decided to buy Airtel Africa (LSE: AAF) and Auto Trader (LSE: AUTO) shares for my holdings.
Telecoms in emerging markets
My decision to buy Airtel shares was primarily a growth play. Telecoms in Africa is a burgeoning market and Airtel looks like a promising option to gain exposure to this.
I bought the shares over a year ago. I’ll admit that on paper, my investment is down around 10%. However, as with all investments, especially longer-term ones, ups and downs are part of the journey. Plus, macroeconomic and geopolitical issues have hurt global markets so I was expecting some volatility.
Speaking of geopolitical issues, this is one of the biggest risks of note I took into account when buying the shares. It’s an ongoing issue. Due to the volatile political landscape in the continent, there is a chance Airtel’s progress and performance could be hurt.
From a bullish perspective, as the continent gears up to move in line with more developed countries and wealth increases, I can see Airtel capitalising and its shares climbing as well as providing me with returns.
The business has done well and continued on an upward trajectory even if its shares haven’t. A passive income opportunity with a dividend yield of 4% has helped me justify my decision. However, I do understand that dividends are never guaranteed.
Automotive giant
I remember being very young and my Dad scouring through the Auto Trader magazine looking at vehicles for sale. Times have moved on, and so has the business.
Everything is now online via its website and app. Now I watch my husband scrolling through looking for potential family cars that I’m persuading him to buy and sell his impractical sporty coupe!
I bought Auto Trader shares as a blue-chip stock. UK readers will understand that car purchases and sales are synonymous with the brand. It possesses the biggest market share and is used by private sellers and dealers alike. It makes most of its money from the listing of sale advertisements.
In Auto Trader’s case, my investment on paper is up 8% over a two-year period. I’m happy with that right now. More importantly, a 1.5% dividend yield has provided me with some passive income.
As the world continues to digitise, Auto Trader looks future-proof to me, at least right now. A risk I do think about is the fact that cheaper marketplace alternatives with no fees — such as Facebook Marketplace — are gaining momentum and traction in market share and popularity. This could hurt Auto Trader in the longer term. I’ll keep an eye on developments and performance too on this front.
I’m happy with my position at present and I probably won’t be adding to the shares anytime soon as they’re quite pricey at current levels, on a price-to-earnings ratio of 28.
