In the market crash, I’d consider investing in these FTSE 100 stocks!
With the Covid-19 crisis ongoing, these are difficult waters for a personal investor to navigate.
Understandably, governments around the world are taking action to stop the spread of the virus. These actions, such as travel restrictions and limits on activities will have an impact on business.
As an investor, my priority is to not lose money. Maximising returns is a secondary objective. Of course, with the current slump in the market, I would imagine most investors’ portfolios are down, but I am hopeful that in the future the tides will turn, and the market will return to its previous buoyancy.
As a long-term investor, I am reminding myself why I bought the stocks that I did in the first place. If nothing has changed, then why would I sell them? By selling, I would turn a paper loss into an actual loss. That is why during this market slump, I have not sold a single share.
Inevitably, some industries and companies will be affected more than others. I will be avoiding travel and leisure shares until the situation becomes clearer, for example.
I believe I have identified two FTSE 100 stocks that could be a good buy in the long-term.
I feel good-quality consumable stocks have an in-built economic moat. The low-cost price of the goods, combined with a strong portfolio brands, make these things customers will continue to buy even in times of hardship. For an investor, they could be shares to buy and hold for the long term.
I believe that Reckitt Benckiser (LSE: RB) is one of these companies. I do not believe that customers will stop buying items like Dettol, Durex, and Calgon, or even switch to own-brand alternatives unless things get really dire.
Over the past three months, the Reckitt Benckiser share price has remained roughly level. By way of comparison, the FTSE 100 has dropped by approximately 31%.
RB is currently trading with a price-to-earnings ratio of 17. That might not make it a bargain buy right now, but if it is safety you are after, I would consider buying Reckitt Benckiser shares.
Similarly, Unilever (LSE: ULVR) has an unrivalled portfolio of brands, including Ben & Jerry’s, Marmite, and Lynx.
It is worth pointing out that if governments begin to restrict imported goods, it could harm both Unilever and Reckitt Benckiser. If this action is taken, revenues could seriously be harmed, with customers potentially finding alternatives elsewhere.
If not, and supply chains remain intact, I struggle to see customers swapping these items from their trolleys.
Nevertheless, Unilever’s share price has dropped by 5% in the past three months. With a price-to-earnings ratio of 17, the stock price is still sightly too expensive for me. But if it drops much further, I’ll be picking up a bargain!
The post In the market crash, I’d consider investing in these FTSE 100 stocks! appeared first on The Motley Fool UK.
T Sligo has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. 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.
Motley Fool UK 2020