Fears over the social, economic and political consequences of Covid-19 remain at fever pitch. But the FTSE 100 has remained largely robust in recent weeks. Trading above 5,700 points, the UK’s premier stock index has risen by a mid-teens percentage from the multi-year troughs punched in late March.
There are many blue-chip beauties that have performed even better than the broader index, however. Rentokil Initial (LSE: RTO) is one such rocket, a Footsie stock that has ballooned 27% in value during the past month.
Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!
Reaching for the sky
The defensive nature of Rentokil’s operations has helped it to soar in value in that time. As it said in recent first-quarter financials: “Pest control has been designated an essential service in the majority of our markets.”
The Footsie firm may not be totally immune to the pandemic-related lockdown across the globe, of course. Mass closures of hotels, restaurants and catering companies has affected trade at both its Pest Control and Hygiene arms. Still, the essential nature of its operations and the contractual nature of most of its business means that sales have remained strong. Ongoing revenues (at constant currencies) at Rentokil were up 7.2% in the first three months of 2020.
This particular large cap doesn’t come cheap. At current prices it carries a forward price-to-earnings (P/E) ratio of 36.8 times. This is some distance above the historical FTSE 100 average of 14.5 times. Still, with concerns over an extended downturn in the global economy rising, such a meaty premium might not restrict more share price gains for Rentokil. Investor demand for providers of indispensable services like this should continue to rise in the weeks and months ahead.
A tasty treat from the FTSE 100
Just Eat Takeaway (LSE: JET) is another FTSE 100 share whose share price has gone gangbusters in recent weeks. It’s up 35% since the troughs of March 23. And with lockdown measures in its major markets set to persist in some form through the next month at least, it looks like trade at the takeaway titan should keep on impressing.
The company’s Takeaway.com unit reported ripping order growth in the first quarter, reflecting booming demand from quarantined Europeans.
Just Eat might not be having everything its own way as mass restaurant closures hamper its ability to take orders. But recent data from the Footsie firm showed that 3,000 new eateries have signed up to its platform since the coronavirus crisis forced Britons inside. Moreover, the business is witnessing more orders earlier in the week than usual and before usual peak times during the day as well.
Just Eat Takeaway’s shares also don’t come cheap. At current prices the FTSE 100 company carries a whopping P/E ratio of 177 times. Still, like Rentokil, I think this stock could keep on surging in value as we move into the summer.
