I’m hunting for the best stocks to buy after last week’s stock market sell-off. I always enjoy going shopping for shares when equities fall, as I can buy more stock for the same total I’d have paid pre-plunge.
I’m not looking to turn a quick profit. That’s not our philosophy at The Motley Fool. My aim is to buy top-quality FTSE 100 shares at temporarily reduced prices, then give them time to recover their lost value. By which I mean at least a decade.
There were some big fallers last week. Rentokil Initial crashed 23.9% and St James’s Place plunged 23.41%, but these were due to company-specific problems. What I’m looking for are stocks that simply got caught up in the wider sell-off.
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Chile-based Antofagasta (LSE: ANTO), one of the largest copper producers in the world, seems to fit the bill. It fell 5.83% last week but is up 18.39% over the last year.
Copper is a play on economic sentiment as it’s in demand when countries are booming and building. Events in the Middle East have shattered confidence, and that’s hit Antofagasta. The ‘higher interest rates for longer’ narrative hasn’t helped, either. Nor has data showing China is slowing.
Antofagasta looks healthy enough having recently posted a 14% rise in first-half revenues to $2.89bn. Profits rose at a slightly slower 7.5% to $1.33bn, due to higher operating costs. It’s now ramping up copper production after a recent dip. Commodity stocks tend to move up and down with the weather and I’d rather buy on a dip than a spike.
Distribution and outsourcing group Bunzl (LSE: BNZL) has fallen off my radar lately, but now it’s back after dipping 4.77% last week. Over one year it’s up 5.81%.
Bunzl supplies everyday, unbranded items such as food packaging and cleaning products to thousands of companies worldwide and has grown aggressively through acquiring smaller, similar businesses.
It’s never going to shoot the lights out but should give me steady share price and dividend growth, which I can now access at a lower entry price. The yield looks low at 2.18% but the group is a FTSE 100 dividend aristocrat having increased shareholder payouts for 23 consecutive years. Bunzl isn’t very glamorous and there’s a danger investors may overlook the stock as they chase bigger names or more exciting opportunities.
Compounding cash
Broker Shore Capital recently hailed Bunzl as a “quality cash compounding play”, and I need some of that in my portfolio.
Scottish Mortgage Investment Trust (LSE: SMT) fell 6.41% last week, continuing its recent poor performance. The fund, which targets “the world’s most exceptional growth companies, whether public or private”, has lost its grip on investor sympathies after crashing by half in 2022.
It has struggled to recover this year, falling 14.01% over 12 months, even though US tech stars Nvidia, Tesla and Amazon are all top 10 holdings.
Scottish Mortgage is a risky recovery play as there’s a danger that manager Tom Slater has lost his way. However, I’ve noticed that when the stock market picks up, Scottish Mortgage picks up more. It’s another that could lead the charge when equities finally recover.
All three are now on my watch list. I’ll do some due diligence and see how they fare over the next few weeks before buying.
