Markets have been volatile for the past few years and with political and economic uncertainty abound, there seems little respite for investors longing for steady returns. 
Indeed, at the end of last month the FTSE 100 dropped below 7,000 level and at the time of writing it remains there, down more than 10% from its all-time high of around 7,903 in May 2018.
Derren Nathan, head of equity research at Hargreaves Lansdown, said that a lack of good news – exacerbated last week by the resignation of prime minister Liz Truss – has had a knock-on effect on markets. Yet we are only 13% off the all-time high and are some way from the nadirs of the past.
“At the start of the Iraq War in March 2003, the index touched 3277.50. During the ‘Great Recession’ of 2007-2009 the FTSE hit a floor of 3460.71 in March of 2009. Most recently the Covid-19 pandemic caused the FTSE 100 to bottom out at 4,898.79 in March 2020,” he said.
“With the US and the UK not officially in recession, there could be some large swings in the months ahead.”
However, Nathan added that during times likes these savvy investors can find opportunities.
In the UK, DS Smith might be an enticing proposition for investors willing to take the risk of buying individual securities, as the cardboard box maker is more interesting than it sounds.
“Its extensive range of sustainable corrugated cardboard solutions has an enviable customer list that includes Amazon and Tesco and its environmental credentials (its products are now 100% recyclable) have also earnt it a rubber stamp from the Ellen MacArthur Foundation, an opinion leader on the transition to the circular economy,” he said.
This should play well with the rise of environmental, social and governance (ESG) investing that has taken the world by storm over the past several years as people look to do good with their cash as well as make reasonable returns.
“DS Smith is exposed to structural growth drivers that are linked to more than just broader economic growth. As well as a shift towards sustainability and plastic replacement, e-commerce still has the potential to outgrow regular retail, with some markets like Italy, Spain and France still underpenetrated,” he said.
Stock market analysts are also constructive on the stock. According to Tip Ranks, which collates analyst recommendations, three of the five analysts who cover the stock rate it a ‘buy’ while two suggest investors ‘hold’.
On average, they have a target share price of 370p, around 32% higher than the shares currently trade (279p).
Another strong option on the domestic market is GlaxoSmithKline, the pharmaceuticals company. The firm sold off its consumer health division Haleon earlier this year, allowing it to focus on speciality medicines that command premium prices, Nathan said, which should improve margins to close to 30% by 2023.
“We see healthcare as relatively defensive in the current environment, and not massively dependent on consumer spending power. A wide pipeline provides diversification and potential for the next blockbuster. But drug discovery is a high-risk pursuit, and no approvals are ever guaranteed,” he said.
According to Tip Ranks, four out of 11 analysts who cover the stock rate it a ‘buy’ while the remaining seven have it as a ‘hold’. On average they have a target share price of 1,707p, 22% higher than its current 1,391p valuation.
Searching further afield, Nathan said drinks manufacturer PepsiCo is an intriguing option for investors who are willing to buy overseas stocks directly.
The US company is a global giant, owning iconic brands such as Walkers Crisps, Quaker Oats and Tropicana alongside the synonymous Pepsi brand.
“Growth in excess of that of the economy seems hard to come by, but the group’s expecting 12% underlying revenue growth this year following a recent upgrade. Its diversity in terms of brands is also matched by its wide geographical reach. It’s a true global player,” the Hargreaves analyst said.
“Pepsi very much as a long-term investment with the potential to generate relatively stable returns, rather than spectacular growth. And with that, comes some shelter against volatility.”