The market crash, caused by the COVID-19 pandemic, has affected a lot of different industries and types of companies. In a time such as this, people will often panic and look to protect themselves from further financial woes.
What savvy investors do is bide their time. They do their research and look into what stocks they can pick up cheaply. Even if the price has not fallen much, some stocks are almost ‘crash-proof’ and too attractive to ignore.
A couple of the stocks that come into the above category for me are Reckitt Benckiser Group (LSE:RB) and Unilever (LSE:ULVR).
RB Group
The name of the parent company may not resonate with some, but the British multinational boasts many well-known brands. The RB family produces health, hygiene, and home products, including brands such as Gaviscon, Dettol and Durex. With over 40,000 employees worldwide, RB’s products reach households around 190 countries.
It recently reported a £2.1bn loss for the 12 months ending 31 December 2019. This is in stark contrast to 2018’s profit of £2.7bn. The primary reason for the loss relates to a £5bn write-down it had to take on a 2017 acquisition of baby formula maker Mead Johnson.
The consumer goods giant said that it was investing £2bn into its business over the next three years as part of wider efforts to restructure the firm. The restructuring plans include dividing its brands into three categories, namely hygiene, health, and nutrition.
RB added that it was seeing a spike in demand for Dettol and Lysol products, as well as increased online sales from consumers in China.
The crash saw RB’s share price dip by almost 15%, but at the time of writing the price sits close to 6250p. This price is close to pre-crash levels, and a promising indicator moving forward.
Unilever
I wrote about Unilever a couple of months ago, pre-Covid 19, and suggested exercising caution. I did mention I would be keeping an eye on developments, and boy, have there been developments. With the pandemic, consumer goods companies are seeing unprecedented demand.
Currently Unilever boasts over 400 brands and operates in 190 countries across the world. It also has a turnover of over 50 billion euros.
Split into four main divisions, food and beverage, cleaning agents, beauty products and home care, some of its brands include Lynx, Dove, Ben & Jerry’s, and Surf.
It is estimated over 2bn people across approximately 200 countries use Unilever products. A dozen of its brands generate annual sales of over $1bn.
Last month, Unilever announced its full year results to 31 December 2019. The key highlights for me were its 3% increase in underlying sales growth, almost 13% increase in free cash flow, and almost 5% growth across each of its divisions. Impressive results in my opinion, which further sweeten the pot from an investment perspective.
The crash initially saw a decrease of more than 20% in share price. However that price has improved somewhat since then. The current price-to-earnings ratio sits at just under 22, which is a bit high and represents a slight risk but not something that overly concerns me.
It is fair to say that having a large, global footprint is especially advantageous in such turbulent times for these two consumer goods monsters.
