As the FTSE 100 plunges, I’d buy these stocks

The FTSE 100 is slumping today, but Rupert Hargreaves thinks this could be a great opportunity to buy these stocks on offer.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The FTSE 100 has slumped today following the news that the US Federal Reserve is considering tapering its quantitative easing programme sooner than analysts expected. This news has sent shockwaves through the market.

However, I think the market’s overreacting. Many companies fundamentals are stronger than ever before, which is far more important than the Fed’s actions, in my opinion.

As such, I’d use today’s declines to snap up shares in what I believe to be undervalued FTSE 100 companies. Here are three stocks I have my eye on. 

Should you invest £1,000 in BP right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if BP made the list?

See the 6 stocks

FTSE 100 stocks on offer 

The first company is BP (LSE: BP). While some investors might not be interested in this oil & gas producer due to its poor ESG credentials, I think the shares are attractive as a recovery play.

As the price of oil has jumped, so have BP’s profits. This has allowed the firm to increase shareholder returns, pay down debt and free up capital for reinvestment. 

Further, I think the price of oil will remain high as the global economy recovers. This implies the FTSE 100 stock will remain a cash cow for some time to come. 

At the time of writing, the stock offers a dividend yield of nearly 7%, although this income shouldn’t be taken for granted. The payout could fall if BP has to pay out more to cover costs stemming from its high emissions levels. 

Global leader 

I believe one of the best FTSE 100 stocks to buy now is AstraZeneca (LSE: AZN). The global pharmaceutical giant is one of the world’s largest, and its size is a crucial advantage. 

This means Astra can spend more on research and development to find new drugs. This is incredibly important for future growth. 

In the past five years, the company’s spending strategy has really started to yield results. Its cancer drugs and vaccines are generating large and growing profits for the enterprise.

As management reinvests profits back into growth, I think it can keep the flywheel spinning. And as the demand for healthcare should only expand in the long run, I reckon Astra will always have a growing market for its products. That’s why I’d buy the FTSE 100 stock today. It also offers a yield of 2.4%. 

Challenges the group may face include competition, which could eat away at profit margins. Political pressure to lower drug costs could also hurt sales growth. 

Valued brand 

Coca-Cola HBC (LSE: CCH) is Europe’s largest Coca-Cola bottler. This gives the company a substantial competitive advantage, and it’s been using this to expand into other markets. 

Coke is one of the world’s most-consumed beverages, and it is marketed by the Coca-Cola group. This means Coca-Cola HBC has a relatively stable and defensive income. It doesn’t have to worry about marketing its main product to consumers. 

This approach has plenty of benefits, although it also has drawbacks. The company only has limited control over its destiny, and if Coca-Cola decided to give it the cold shoulder, revenues could plummet. That’s probably the most considerable risk to growth in the long run. 

Despite this risk, I’d buy the FTSE 100 stock today on weakness. Its growth potential and a 2.1% dividend yield look attractive to me. 

Should you invest £1,000 in BP right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if BP made the list?

See the 6 stocks

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

More on Investing Articles

Modern apartments on both side of river Irwell passing through Manchester city centre, UK.
Investing Articles

3 UK shares I’d consider owning for decades

This trio of UK shares are all ones our writer would like to own for the long haul. He only…

Read more »

Rolls-Royce's Pearl 10X engine series
Investing Articles

Yet another all-time high for the Rolls-Royce share price! Does it make sense for me to invest now?

Our writer understands why the Rolls-Royce share price has soared -- and recognises the potential to go higher still. So…

Read more »

UK financial background: share prices and stock graph overlaid on an image of the Union Jack
Investing Articles

5 British stocks Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Middle-aged Caucasian woman deep in thought while looking out of the window
Investing Articles

Is it too late to start investing at 40? Or maybe even 50?

Christopher Ruane explains the impact time can have on investment returns -- and why he thinks it's never too late…

Read more »

Santa Clara offices of NVIDIA
Investing Articles

Will Nvidia stock hit $100 or $200 first?

Christopher Ruane reckons there's a credible case for Nvidia stock to fall to $100, or soar to $200. So is…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

Should I put Greggs shares in my Stocks and Shares ISA?

Our writer considers whether there’s room in his Stocks and Shares ISA for the baker best known for its pies…

Read more »

Mother At Home Getting Son Wearing Uniform Ready For First Day Of School
Investing Articles

I’ve just earned £1,104 of passive income in 2 weeks, thanks to blue-chip UK dividend shares

Harvey Jones is building up his retirement savings one FTSE 100 dividend at a time. He's reinvesting every penny of…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

After 48 years, I think Warren Buffett’s 4 ‘rules’ are still relevant

Nearly 50 years ago, Warren Buffett listed four criteria that he used when assessing stocks. Our writer explains how he…

Read more »