The news on the economy just keeps getting worse. The Office of National Statistics released growth numbers yesterday, and they are dismal to say the least. In the three months to April, the economy shrank by 10.4% and by a huge 20.4% in April alone. According to ONS statistician Jonathan Athow, quoted in the release, “April’s fall in GDP is the biggest the UK has ever seen”. But as unfortunate as it is, for the smart investor I think it’s a good time to make FTSE 100 bargain buys.
FTSE 100 loses momentum
The FTSE 100, along with broader stock markets, had already lost some of its momentum in recent days. This was attributed to the Federal Reserve saying that the US faces a long road to recovery. The FTSE 100 alone has fallen every single day of the week as I write. Going by the latest news on the economy, it appears that more pain could be in store. At Thursday’s close, it was already 6.5% down from the end of last week.
As dismal as the situation appears, however, all needn’t be lost. In fact, if we’ve learnt any lessons from the stock market crash less than two months ago, it’s that they are good times to invest in quality stocks. These can be relied on to grow over time.
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High-quality investing options
One such stock is Unilever. The consumer goods giant is a super dependable stock, and is trading at a discount right now. It’s share price is much below that seen in pre-pandemic 2020. It’s even lower than its one-year high. Until now the company had dual headquarters in the UK and the Netherlands. But after attempts at unifying it into one Dutch company a couple of years ago, it has finally been able to become an all-British one. This may well make it a leaner and better run operation.
AstraZeneca is another FTSE 100 stock whose share price has cooled off in the past few days. It’s one of the few shares that defied the stock market crash. It’s developing a vaccine for Covid-19 which gave it far more fillip than other defensives. I liked the share even before the pandemic hit, but it has proven itself further during this time of crisis. AZN’s still quite pricey, based on the price-to-earnings (P/E) ratio, but going by past trends, its share price isn’t about to correct significantly.
The London Stock Exchange Group is another pricey FTSE 100 share that’s come off in the past few days. Its P/E still remains quite high at 68 times, but like in the case of AZN, I’m not sure if it is likely to fall sharply in the foreseeable future. Its results for the quarter ended in March showed robust financial performance. At a time when companies across the FTSE 100 are flailing, if not failing, this stands out.
These are just three examples of the many FTSE 100 companies that can give great investor returns in the near term and in the long term. I think the time to buy them is now.
