Forget the crash! I think these 3 FTSE 100 stocks could double

These well-known FTSE 100 dividend stocks could stage strong recoveries after the coronavirus outbreak, says Roland Head.

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The FTSE 100 has crashed, falling by more than 30% in just one month. But while I agree the current situation is serious, I also believe that the world will return to normal at some point. When it does, I expect many well-known FTSE 100 stocks to stage strong recoveries.

Today I want to look at three shares I think could double over the next few years.

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A top value pick

I already own shares of ITV (LSE: ITV), but I’m keen to buy more during the current downturn. I’m pretty confident that this business offers a lot of value for shareholders at current levels.

The coronavirus outbreak will put pressure on advertising revenues, which were already in decline. But ITV was already ramping up its spending on content production and online streaming services. Over time, this should reduce the group’s dependence on advertising revenue.

In the meantime, ITV remains well-funded and highly profitable, with an operating margin of 16% last year.

2020 will be painful. But I don’t see any reason why trading won’t recover. I also think there’s a chance that a bidder will be attracted to this FTSE 100 group’s big library of programme content.

With ITV shares now trading on just five times 2019 earnings and offering a yield of 13%, I think the television group is a cracking long-term buy.

This FTSE 100 stock should fly again

My next choice is a little more daring. Like most airlines, easyJet (LSE: EZJ) has grounded most of its fleet and is facing a very difficult future. Indeed, I suspect that some airlines will go bust as a result of the coronavirus outbreak. But I don’t think easyJet will be one of them.

In the years I’ve been following this company, it’s been consistently profitable and well run. The FTSE 100 member’s financial situation also looks fairly safe to me.

On 16 March, easyJet said it had £1.6bn of cash on hand and an unused $500m credit facility. I estimate that would be enough to cover about six months’ normal operating costs. Of course, costs should be much lower while most planes are grounded.

I’m pretty confident that easyJet will survive until it can fly again. And although I can’t be certain that the shares won’t continue falling, I think they look cheap at under 500p. I’d be looking for 1,000p in five years’ time.

Strength in defence

Industrial group Meggitt (LSE: MGGT) is likely to suffer from a downturn in civil aviation. The company makes lots of parts for passenger aircraft. But I think this market should recover over time.

In the meantime, this FTSE 100 firm should be able to rely on substantial revenues from the defence sector. Meggitt’s 2019 results showed revenue of £825m from defence last year — roughly one-third of its total sales.

I’m pretty sure Meggitt will be hit by the airline shutdown and the probability of slower market conditions to follow. But its equipment is installed on more than 73,000 aircraft globally. These will need maintaining and supporting in the years ahead. This is often more profitable than the original sale.

Meggitt stock now trades on a multiple of eight times 2019 profits. The shares have fallen by about 70% since January. In my view, now could be a good time to start building a long-term position.

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Roland Head owns shares of ITV. The Motley Fool UK has recommended ITV and Meggitt. 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.

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