2020 has been a scary time to be an investor. The FTSE 100 is down by about 25% and the eventual impact of the coronavirus pandemic is still unknown. But every stock market crash in history has created buying opportunities for long-term investors. I don’t think this time will be any different.
Today, I want to look at three FTSE 100 shares which look like bargain buys to me at current levels.
You can’t avoid this company
The Unilever (LSE: ULVR) share price has fallen by just 5% this year, compared to that 25% drop for the FTSE 100. By the standards of the wider market, shares in the consumer goods firm may not look cheap to you.
However, the Unilever share price has risen by about 370% over the last 20 years. Over the same period, the FTSE 100 has fallen by nearly 10%. I see this as a high-quality business that’s likely to continue outperforming the market.
Unilever products can be found in millions of households all over the world. I have some in my home. I’m sure you do too. Brands such as Knorr, Hellmann’s, Dove and Persil are highly recognisable. They support steady sales growth and strong profit margins.
As I write, Unilever stock trades on about 18 times forecast earnings, with a 3.7% dividend yield. If you’re investing for retirement, I think this could be a good level to buy.
Luxury could be a safe option
One of top FTSE 100 picks is luxury fashion brand Burberry Group (LSE: BRBY). Although we could be heading into a global recession, history suggests the top end of the market tends to recover quite quickly. Sometimes spending doesn’t drop much at all.
Like Unilever, Burberry has a long track record of outperforming the market. Over the last 10 years, the Burberry share price has risen by 95%, compared to a fall of around 15% for the FTSE 100. If you want to retire early, I reckon owning stocks like this should make it much easier.
Burberry shares trade on around 20 times forecast earnings at the moment, with a yield of almost 3%. I see that as a decent entry point for this firm, which has a £600m cash pile and didn’t cut its dividend during the 2008 financial crisis.
This FTSE 100 share is my top tech pick
The UK doesn’t have many big tech success stories but, in my view, Sage Group (LSE: SGE) is up there with the best of them.
Shares in this accountancy software group have risen by 170% over the last 10 years, plus dividends. Like Unilever and Burberry, Sage has a strong brand with a loyal customer following.
One reason for this is that the firm’s products are fairly ‘sticky’. Once you start using one set of accounting software, you’re unlikely to change to a different product without a good reason.
In recent years, this FTSE 100 firm has worked hard to convert its customers to online services. The results are now starting to show. The business generated an operating profit margin of 20% in 2019, with 85% of revenue coming from recurring subscriptions.
I see Sage as a valuable business with great long-term prospects. At current levels, the shares trade on around 21 times earnings and offer a yield of nearly 3%. I’d be a buyer at this level.
