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3 bargain FTSE 100 shares I’d snap up for my Stocks & Shares ISA

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Every stock market crash in history has provided opportunities for big future profits. I’m pretty sure the coronavirus crash will be the same, so I’ve been hunting through the FTSE 100 for potential bargains.

A neat package

Supermarkets aren’t the only companies that have been trading well this year. FTSE 100 packaging group DS Smith (LSE: SMDS) said on Wednesday that it had seen growth in several areas over the last six months.

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DS Smith’s main business is in food and e-commerce packaging, so it’s benefited from extra demand for groceries and internet shopping during the lockdown.

There’s still some risk of disruption in the year ahead, so management has suspended dividend payments until at least July. However, the firm’s financial position looks reasonable to me and I expect payouts to return fairly quickly.

The DS Smith share price has fallen by more than 20% so far this year, leaving the stock trading on about nine times forecast earnings. If the dividend is resumed at previous levels, the yield should be about 5.5%. I own this FTSE 100 share and would like to buy more.

This FTSE 100 stock looks safer than houses

Coronavirus has brought the housing market to a halt, but I suspect the slowdown will last longer than this. I’m more interested in investing in commercial property at the moment.

One stock on my buy list is FTSE 100 landlord British Land (LSE: BLND). Around 55% of the REIT’s property is London offices, with 41% in retail and 4% in the group’s Canada Water redevelopment project.

Obviously many of the group’s retail and hospitality tenants are going through a difficult period at the moment. But British Land’s financial strength means the group can afford to offer payment holidays or deferrals where needed. In the meantime, I expect minimal disruption to rent collection from the group’s office tenants.

The picture looks messy this year and the 2020 dividend may be reduced or cancelled — so the 6.7% forecast yield is at risk.

However, British Land shares now trade at a discount of about 50% to their net asset value. In my view, this means a lot of bad news is already priced-in to the stock. I see this FTSE 100 group as a bargain buy at current levels.

Profit from China recovery

Bank investors weren’t very happy when the UK regulator told them to scrap dividend payments on 31 March. Shareholders in FTSE 100 bank HSBC Holdings (LSE: HSBA) were particularly unhappy, as their bank generated virtually all of its profits in Asia last year.

HSBC’s London stock market listing meant that it had no choice but to comply with the dividend ban. But the group’s balance sheet looked strong to me at the end of 2019. I’m pretty sure that this 200-year old bank could afford to absorb Covid-19 losses and pay a dividend.

News out of China suggests that the world’s second-largest economy is already cranking back into life as the pandemic recedes. I believe that HSBC’s profits are likely to be more resilient than those of some UK-focused banks.

Until the bank dividend ban came into force, HSBC shares were offering a forecast dividend yield of about 8%. I expect the bank to resume dividend payments at the end of 2020, or as soon as it’s allowed to. In my view, the shares offer good value for income buyers at today’s prices.

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Roland Head owns shares of British Land Co and DS Smith. The Motley Fool UK has recommended British Land Co, DS Smith, and HSBC Holdings. 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.

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