What a month April turned out to be for the FTSE 100. It rose over 2.6%, or 209.1 points, across the 30 days. Yesterday (30 April), it reached a record intraday high of 8.199.9 points.
That’s a refreshing sight. I’ve stated on numerous occasions that I’m bullish on the UK stock market’s prospects. I believe plenty of shares look criminally undervalued. It looks like investors are starting to catch on.
But as positive as last month was, I won’t dwell on it for too long. I’m already looking ahead to what could be in store this month. With that in mind, here are two Footsie stocks I reckon investors should strongly consider buying.
HSBC
April proved to be a fruitful period for HSBC (LSE: HSBA) shareholders with the stock rising 10.5%. No doubt they’ll be hoping the times ahead are the same.
There’s good reason to believe that, too. That’s especially true since its Q1 earnings beat many analyst expectations.
Revenues rose to $17bn and while its pre-tax profit fell to $12.7bn, this was slightly higher than what the City had predicted.
After its solid start to the year, the business is also continuing to reward shareholders. It announced an interim dividend of $0.10 alongside a special dividend of $0.21 following the sale of its Canadian unit.
The stock yields 7%, which is comfortably above the Footsie average (3.9%). Going forward, this is forecasted to rise to 7.9% by 2026.
The concern with HSBC is its focus on Asia. The Chinese property market continues to wobble and with the bank’s heavy investment in the sector, this could worry some investors.
But in the years to come, I’m confident its attention on the region will pay dividends as it continues to earmark more investment into these fast-growing nations. Trading on 7.6 times earnings, HSBC shares look like a steal right now.
London Stock Exchange Group
April wasn’t as kind to London Stock Exchange Group (LSE: LSEG) as it was to HSBC. In the last month, the stock has fallen by 7.5%. Even so, that wouldn’t put me off from buying some shares today.
It’s not the first name that springs to mind when you consider artificial intelligence stocks, but I like the moves the business is making in the exciting space.
It recently signed a 10-year deal with Microsoft that will see it develop generative AI tools. As part of the deal, Microsoft took a 4% stake in the firm, which is encouraging.
Its valuation could be a concern for some. It currently trades on around 55 times earnings. That’s a lot higher than the long-term Footsie average of around 15. In the short term, that could see its share price pulled back.
Nonetheless, I see the stock as a real long-term winner. It owns and manages the London Stock Exchange. That means it’s well-positioned to provide consistent growth in the years and decades to come. Whether the stock market rises or falls, the company will continue to generate revenue through fees.
That said, it generates the bulk of its profits from its data and analytics businesses. And following its acquisition of Refinitiv, it’s now a global leader in multiple asset classes.
At their current price of £87.20, I reckon its shares could be a savvy purchase.
The post The FTSE 100 reached record highs in April! Here’s what investors should consider buying in May appeared first on The Motley Fool UK.
Like buying £1 for 31p
This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!
Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.
What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?
See the full investment case
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HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. Charlie Keough has positions in HSBC Holdings. The Motley Fool UK has recommended HSBC Holdings and Microsoft. 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.
