The FTSE 100 is packed with the biggest UK-listed companies. I often scour this index to find firms to buy and hold for the long term as part of my investment journey. Many of these businesses are well-known and I’ve been looking at two that exhibit strong historical results. What’s more, they may be trading at a discount. Why am I thinking about adding these two stocks to my portfolio? Let’s take a closer look.
A FTSE 100 commodities firm
The first company I’m looking at for a long-term buy-and-hold strategy is Anglo American (LSE:AAL). This business mines and produces a number of commodities, including copper, platinum group metals (PGMs), iron ore, and coal. It operates over three continents.
Between the 2017 and 2021 calendar years, revenue increased significantly from $26bn to $41.5bn. This latter figure was a 63% increase compared with the 2020 calendar year.
What’s more, profit before tax rose from $5.5bn to $17.6bn. Unsurprisingly, earnings-per-share (EPS) grew from ¢257 to ¢722. This is largely due to higher commodity prices in 2021. One risk, however, is that these higher prices may not be sustainable in the long term.
Although past performance is not necessarily indicative of future performance, this firm’s results record is particularly strong. This gives me confidence as a potential investor.
With a forward price-to-earnings (P/E) ratio of 8.99, the Anglo American share price may be cheap. A major competitor, Antofagasta, has a forward P/E ratio of 19.76. Anglo American currently trades at 4,004p, up 38.5% in the past year. I think there may be further upside potential.
Another global player
The second company is international distribution and services firm Bunzl (LSE:BNZL). With products including disposable packaging, it operates throughout Europe, the UK and North America.
Between the 2017 and 2021 calendar years, revenue increased from £8.5bn to £10.2bn, while profit before tax grew from £409m to £568m. EPS rose from 119.4p to 162.5p. Like Anglo American’s, these historical results are strong.
The business, however, saw its adjusted operating profit decline between the 2020 and 2021 calendar years. This was mainly due to a fall in product sales during the pandemic. While a recovery is possible, I want to see this demonstrated in future results.
Despite this, the Bunzl share price might be cheap. It has a forward P/E ratio of 18.32, which is slightly lower than that of Sysco Corporation, a major competitor. This latter company’s forward P/E ratio is 19.38. Bunzl currently trades at 2,960p, up 28% in the past year.
Overall, I like both businesses. While Anglo American could continue to benefit from higher commodity prices in the near future, Bunzl could begin to recover following the pandemic. They may both also be cheap at current levels and I will be buying shares in each company soon.
