2 FTSE 100 shares I’d buy and hold in the market crash

Buying FTSE 100 consumable stocks could be a winning strategy in the market crash. I’d start by looking at these two shares.

| More on:

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.

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.

The FTSE 100 has fallen by 19%, year-to-date. The market turbulence might have opened up a great buying opportunity for investors looking to snap up shares at bargain prices.

However, it is wise to exercise caution.

“Never lose money”, is Warren Buffett’s first rule of investing. There is certainly an abundance of risk in the market today.

With this in mind, I have identified two FTSE 100 shares that I believe might offer a good balance of risk and reward for the long-term investor.

The global drinks giant

Diageo’s (LSE: DGE) share price has fallen by 10%, year-to-date. 

Many of the pubs, restaurants, and bars that sell the company’s drinks remain closed because of the lockdown. This is likely to hit Diageo’s revenue for some time.

However, when things turn back to normal, I fully expect that people will still be consuming Diageo’s drinks. One of Diageo’s many strengths is the brands included in its portfolio, such as Guinness, Baileys, and Smirnoff.

Already, the business has noted that on mainland China, where bars and restaurants are gradually reopening, it has seen a slight return of on-trade consumption.

Diageo has decided to proceed with its interim dividend as previously announced. However, its share buyback programme has been put on ice.

The company has a strong balance sheet and is working with key suppliers and customers to ensure it is in a good position when customer demand increases.

The stock is trading at a price-to-earnings ratio of roughly 25, which might seem a tad pricey to some. But in my view, its global presence and position in the market makes it a great FTSE 100 stock to buy and hold for the long term.

Time to buy this FTSE 100 share?

Like Diageo, Reckitt Benckiser (LSE: RB) has a strong portfolio of brands. These products include household names like Dettol, Gaviscon, Durex, and Nurofen.

The low-cost nature of these items means that sales might be resilient even in times of economic difficulties. Like Royston Wild, I believe this indicates that Reckitt Benckiser could be a great FTSE 100 defensive stock to buy right now. 

Due to strong sales of its health and hygiene products, the company’s first-quarter revenue was up by over 13.3% to £3.5bn. I believe this is a trend that could be continued until a satisfactory vaccination is found for the coronavirus, with cleaning products likely to be in high-demand for some time.

Will this impressive sales momentum continue in the long term? It is hard to say. The company has announced that it expects its outlook to be better for the year than previously announced. In the medium term, Reckitt Benckiser is aiming for sustained mid-single-digit organic revenue growth by 2025.

In the market sell-off, Reckitt Benckiser’s share price dropped by almost 17%. Since then, the market has shown signs of a recovery, and its stock price has rebounded by roughly 34%. Consequently, the shares might look expensive, with a price-to-earnings ratio of 20.

Despite not trading at a bargain price, buying shares in consumable companies with sustainable revenue has been a winning strategy for investors like Warren Buffett.

I think FTSE 100 shares like Diageo and Reckitt Benckiser are the type to buy and hold for the long term. As the saying goes, “time in the market is better than timing the market”.

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.

T Sligo has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo. 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

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

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

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »