‘Market crash recovery’ isn’t a phrase I’m reading a lot in financial headlines at the moment. This suggests it could be a good time for risk-tolerant contrarian investors to start shopping for recovery plays. The market crash has been unprecedented in terms of its speed. And I see a credible argument the recovery could also be unusually quick.
China is already beginning to get back to business. And there are signs Covid-19 infection rates are slowing in Europe’s earliest-hit nation, Italy. With recovery in mind, here are 10 FTSE stocks I see as very buyable today.
Market crash-trashed travel and leisure
Companies in the travel and leisure sector have been particularly hard-hit. These include some notable FTSE 100 names. UK-focused Premier Inn owner Whitbread is one. International cruise ships group Carnival is another.
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I believe both companies could bounce back strongly, if they traverse the current earnings abyss. I view Whitbread’s decision to keep all furloughed employees on full pay as a sign of management’s confidence. Meanwhile, Carnival has managed to raise £5bn to help it stay afloat through the crisis.
Camera obscura
Travel curtailments, and wider lockdowns, have hurt FTSE 250 firm Photo-Me International. Many of its photobooths and other vending operations are sited in areas of high footfall. That means public transport venues and shopping malls. However, I’m encouraged by the chief executive buying shedloads of shares in recent days.
Meanwhile, FTSE 100 broadcaster ITV is being hit by the widespread suspension of corporate marketing spend. I see this as another good stock for a market crash recovery.
Property picks
Housebuilders tend to be strong recovery plays. The FTSE 100 volume builders aren’t quite cheap enough for my liking at the moment. However, mid-cap retirement home specialist McCarthy & Stone is. Its shares are trading at less than half its tangible net asset value. What’s more, it claims it could survive 2.5 years with no sales revenue.
Staying with mid-caps and the property theme, I reckon global serviced offices group IWG is another with great recovery potential. It briefly closed some of its centres in China earlier in the year. However, it reported last week all are now operational again.
Industrials for a market crash recovery
Similarly, international industrial group Melrose has recently reported all its Chinese factories have reopened. The company has an excellent track record of buying good manufacturing businesses, improving them, and selling them on. I think sentiment for the stock should improve dramatically in a market crash recovery.
The same goes for fellow FTSE 100 industrial Rolls-Royce, which needs no introduction. The company reported good momentum in the underlying business before the full onset of Covid-19. I don’t expect the virus to have a long-lasting impact on the company’s fortunes.
Financial fancies
In the financial sector, UK/US-focused Barclays is a particularly unloved FTSE 100 bank. The shares are currently trading at a near-70% discount to tangible net asset value. I think this offers a wide margin of safety against any near-term write-downs of assets.
I also like the recovery potential of Asia-focused Footsie insurer Prudential. Its teams in the UK, US and Africa have the benefit of learning from their colleagues in Asia. They have already lived with Covid-19 for several months.
There you have it, 10 stocks I think look very buyable for risk-tolerant investors, seeking high rewards from a market crash recovery.
