Have I left it too late to profit from the stock market recovery?

The stock market recovery appears to be on hold for now, but that doesn’t worry me. I’ll retain my focus on buying great value FTSE 100 shares.

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.

One English pound placed on a graph to represent an economic down turn

Image source: Getty Images

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.

As the FTSE 100 powers past 7,000, I’m wondering how much further the stock market recovery has to run. The index is up 40% since slipping below 5,000 in March last year, but has been idling lately.

Can the FTSE 100 press even higher, to 7,500 or even 8,000? It absolutely could, given the UK’s relative vaccine success. Or could it crash back down to 6,500, or even 6,000? That’s also possible, given mutant Covid threats.

That’s the problem with second-guessing the stock market. Nobody can say for sure whether a recovery can continue, or what will trigger the next crash. There are simply too many variables. So what should I do?

Should you invest £1,000 in Ashtead Group Plc 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 Ashtead Group Plc made the list?

See the 6 stocks

I can’t second-guess this stock market recovery

The first step is to remember what ace investor Warren Buffett has taught us. Don’t predict the market! Or as he put it: “A prediction about the direction of the stock market tells you nothing about where stocks are headed, but a whole lot about the person doing the predicting.” So what can I do?

When deciding whether to invest in UK shares, it’s the underlying company that matters. Does it have solid, growing revenues? A healthy balance sheet? Good management? Loyal customers? High entry barriers for rivals?

I can’t gauge whether today’s stock market recovery will continue, but I can do my best to work out which stocks are well-placed to increase their profits if it does, or will prove resilient if it crashes.

Lately, I have been steering clear of the riskier recovery stocks, such as cinema chains and travel companies. I know they’ve done well lately, but I also think they’re vulnerable to another stock market crash. Recent government flip-flopping over travel restrictions has increased my unease. The easyJet share price fell 5% yesterday after ministers reversed their decision to green list Portugal.

Today, I’m focusing on companies that have shown resilience throughout the last crazy year. I admire Legal & General Group for standing by its generous dividend. I’d also buy grocery chain Tesco, which also offers a steady, solid yield.

I’d buy these FTSE 100 stocks in any weather

Business support specialist Bunzl, pharmaceutical giants and income hero GlaxoSmithKline, clothing retailer Next, and future renewables giant SSE are just some of the companies I’d consider buying today.

I might also build a position in long-term favourites such as spirits giant Diageo and household goods supplier Unilever. I’d also add asset manager M&G and global mining giant Rio Tinto to my watch list, as they offer incredible yields of 7.34% and 5.33% respectively. By investing in a balanced spread of shares I don’t have to worry whether the stock market recovery will continue, pause, or reverse.

Even a crash doesn’t worry me toon much. History shows that stock markets should always rebound, given time. I’d simply take the opportunity to snap up more stock at a lower price. Then when the next leg of the stock market recovery hopefully arrives, I should reap the benefits.

But what does the head of The Motley Fool’s investing team think?

Should you invest £1,000 in Ashtead Group Plc 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 Ashtead Group Plc 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.

Harvey Jones 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

Investing Articles

If a 50-year-old puts £750 a month into a SIPP, here’s what they could have by retirement

Investing £750 in a SIPP each month could generate a pension pot worth anywhere between £259,528 and £602,410 in just…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

Could 1 ISA, £20,000, and 5 FTSE 100 stocks generate £12,517 of passive income a year?

The maximum amount that can be put into a Stocks and Shares ISA this year is £20,000. But how much…

Read more »

Investing Articles

If a 30-year-old puts £300 a month into a Stocks & Shares ISA, here’s what they could have by retirement

The Stocks and Shares ISA can, over the long term, prove a great way to build life-changing wealth. Royston Wild…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£30k to invest? 3 FTSE 100 and FTSE 250 dividend shares to target a £2,190 passive income

Forward dividend yields on these FTSE 100 and FTSE 250 stocks smash the average for UK shares, as Royston Wild…

Read more »

Investing Articles

3 proven strategies to help build generational wealth in the stock market

By employing the right approach, it's entirely possible to build a sizeable sum of money in the stock market over…

Read more »

Playful senior couple in aprons dancing and smiling while preparing healthy dinner at home
Investing Articles

£25,000 invested in Rolls-Royce shares 3 years ago is now worth…

Rolls-Royce shares have soared, driven by strong defence and aviation demand, debt reduction, and aggressive growth targets. A remarkable turnaround.

Read more »

Investing Articles

Down 21% since February, this winning FTSE 100 stock now looks interesting

After losing nearly a quarter of its value in the space of a month, this high-quality FTSE 100 share's firmly…

Read more »

Investing Articles

3 high-yield dividend shares to consider buying for a retirement portfolio

Dividend shares can provide retirees with regular passive income in their golden years. Our writer picks out three with yields…

Read more »