I was recently reviewing the best FTSE 100 shares by share price performance in 2024 to date. A few familiar names stood out.
However, two picks I want to cover in more detail today are DS Smith (LSE: SMDS) and Beazley (LSE: BEZ).
Here’s why I’d love to buy some shares in both picks when I next have some funds to invest.
DS Smith
International packaging firm DS Smith has been around for a long time, approximately 70 years in fact. I must admit packaging isn’t the most riveting business. However, I’m more interested in shareholder value, and DS Smith ticks this box nicely.
The shares have been on a good run recently. Over a 12-month period, they’re up 64% from 286p at this time last year, to current levels of 470p. In 2024, they’re up 53% from 306p, to current levels.
DS Smith has a fantastic track record of performance, including churning out earnings and profit growth for many years. Although I do understand past performance isn’t a guarantee of the future, I can see this trend continuing. The changing habits of shopping and the e-commerce boom has led to huge demand for packaging.
From a returns view, the shares offer a dividend yield of 3.8%, which sweetens the investment case. However, I do understand that dividends are never guaranteed.
Finally, the business continues to adapt to future trends and appeals to ESG investors through the use of its environmentally friendly packaging alternatives. This could help future-proof earnings.
Two issues I’ll keep an eye on are DS Smith’s valuation, as well as inflationary pressures. The shares trade on a price-to-earnings ratio of 17, so any dent in earnings could send the shares tumbling. Inflation is a worry as a rise in cost of raw materials could dent profitability and returns.
Beazley
Lloyds of London insurance firm Beazley deals in speciality insurance risk and reinsurance. Like DS Smith, it’s hardly exciting, but nevertheless the business looks like a solid investment to me.
The shares have also done well, up 40% over a 12-month period, from 537p at this time last year, to current levels of 754p. In 2024 to date, they’re up 44% from 522p, to current levels.
I can see why the shares have been on a great run this year, and excellent interim results revealed earlier this month helped the ascent. The main takeaways for me were that profit before tax increased by a whopping 99% compared to the same period last year. Furthermore, insurance written premiums, and earnings per share also grew impressively.
From a fundamentals view, the shares look excellent value for money on a price-to-earnings ratio of just over four. Plus, a dividend yield of 1.9% helps my investment case.
Looking at the bear case, insurance firms like Beazley are at the mercy of disasters or catastrophes. These can dent earnings, when payouts are needed. A prime example of such an event is last month’s IT outage which impacted millions. Although unavoidable, it is something for me to bear in mind.
