The FTSE 100 has continued marching back towards the 6,000-point marker in recent sessions. Investor confidence remains fragile as coronavirus infections keep rising and disastrous economic data frays the nerves. But there are simply too many great bargains to keep savvy share-pickers away.
More turbulence on global stock markets could be just around the corner. However, it’s worth remembering that volatility is nothing new. And the numbers are there to show that long-term equity investors, even accounting for huge swings like those of recent months, usually make big profits over a long time horizon. Total returns tend to sit between 8% and 10% for these individuals, studies show.
A FTSE 100 steal
Market appetite for DS Smith (LSE: SMDS) hasn’t exactly ripped higher of late. But the boxbuilder’s low valuations have encouraged dip buying from opportunistic investors. At current prices, it still sports a low forward P/E ratio around 10 times despite renewed buying interest.
Trading has remained robust at this FTSE 100 firm as grocery sales have gone through the roof. There’s plenty of reason to expect demand for DS Smith’s product to remain robust too. Firstly, the company has decided to sharpen its focus on e-commerce in recent years. It’s a decision that will set it up nicely for the inevitable boost to online food sales long after the pandemic has passed.
And secondly, DS Smith stands to gain from ongoing competitiveness in the supermarket space, and a desire to separate cash-strapped shoppers from their money. It puts a greater emphasis on retailers’ (and fast-moving consumer goods (FMCG) producers’) ability to create bold and attractive displays at the point of sale. And DS Smith is an expert in creating innovative displays to get goods of all types flying off the shelves and into shoppers’ baskets.
Data shows that around three-quarters of purchase decisions are made in store, underlining how critical these particular tools are in shifting volumes. Their importance will only grow in an increasingly-cutthroat marketplace and an environment of reduced shopper confidence.
Go for gold
Unlike DS Smith, Polymetal International (LSE: POLY) is a Footsie share which has actually gained in value following the Covid-19 outbreak. You don’t have to be a rocket scientist to understand why. Gold is one of the safest bets in town during times of huge social, macroeconomic and political uncertainty like these. It’s why metal prices hit new seven-year peaks last month.
Investors are betting that bullion values will keep rising as the aftermath of the pandemic becomes apparent. New record highs above $2,000 per ounce are being tipped in the months ahead, reflecting expectations of a painful and prolonged world recession and sustained rate-cutting by central banks.
Despite these gains, though, many gold diggers remain attractive from a value perspective. At current prices Polymetal for one changes hands on a forward P/E ratio of 12 times. And this leaves plenty of scope for more share price gains, in my opinion. Throw in a chubby 4.7% dividend yield for 2020 too, and I reckon this is a brilliant blue-chip to load up on today.
Royston Wild owns shares of DS Smith. The Motley Fool UK has recommended DS Smith. 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.