Stock market crash: 3 FTSE 100 stocks I’d buy today to beat the recession

Some FTSE 100 stocks can still bring superior returns to investors even if the economy is in a recession. Here are three of my favourites.

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.

There’s a whole lot of bad news for investors to contend with right now. There’s the fresh quarantine for France, which closely follows that for Spain. The headline GDP numbers offered little support and, as I write on Friday, the FTSE 100 index has weakened.

But there are clear pockets of recovery as well, which I think bode well for investors. A case in point is the sharp turnaround in retail sales numbers. According to the Office of National Statistics (ONS), retail sales volumes grew by 14% in June. More recently, the British Retail Consortium-KPMG sales monitor reported a 3.2% increase in retail sales volume in July compared to the same month last year. 

Consider this FTSE 100 online retailer

I think this bodes well for retailers in general, but if we drill down to the specifics, food retailers or grocers are gainers. This is no surprise. The FTSE 100 online grocer, Ocado, has gained in the past months as consumers made more purchases online. According to its latest update, its revenue increased 27% from last year. While it refrains from providing forecasts, it does have a “positive outlook” as well. It’s true that there’s been a sharp run-up in the company’s share price through the year, but I’m a believer in its long-term story. Over time online sales will only increase, and Ocado will be an industry leader. I expect Ocado’s share price to remain elevated. 

Comparatively, I’m still cautious about FTSE 100 bricks-and-mortar retailers like Tesco and Sainsbury’s, although both of them have seen healthy recent updates. In the case of Tesco, my big concern is the sustainability of its financial health, among other reasons for concern. This is true for Sainsbury’s too. Additionally, its share price movements have been weak and, unlike Tesco, it doesn’t pay dividends.

Companies that maintain homes

Besides grocers, I’d also consider buying stocks of home goods companies. As per ONS’s numbers, of non-food retailers, household goods stores are the only ones to have seen an uptick in sales in June. This correlates with improved performance of the FTSE 100 home improvement stock Kingfisher. Its sales have shown double-digit growth in the recent weeks and it “anticipates its half year adjusted pre-tax profit to be ahead of prior year”. 

Relatedly, the FTSE 100 emergency home repairs provider, HomeServe, is another stock to consider. Its latest results show revenue growth and also some increase in operating profits. It also pays a dividend, which is worth noting, even though it has a small yield. 

I reckon that it may not be all smooth-sailing for retailers from here. Even if consumer spending remains healthy in the next few months, the real extent of economic damage will be known only in October as the government’s furlough scheme is rolled back. I’d watch out for a bumpy time then, but I think over the long term, FTSE 100 companies targeting the retail market should stand in good stead. I’d start buying them now. 

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 considered so you should consider taking independent financial advice.

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended Homeserve and Tesco. 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

A pastel colored growing graph with rising rocket.
Investing Articles

3 top shares for the ongoing stock market recovery

Although messy, I think the stock market recovery is beginning and that's why I'm now buying shares such as these.

Read more »

Mature people enjoying time together during road trip
Investing Articles

5 UK shares I bought for income of 9.5% a year

We recently bought these five cheap UK shares for their generous dividend yields. These cash payouts range from nearly 7%…

Read more »

Bearded man writing on notepad in front of computer
Investing Articles

Is there still time to buy Scottish Mortgage shares?

The Scottish Mortgage share price has risen strongly in recent weeks. Should I pile into the FTSE 100 momentum stock…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

Why I’d start buying shares with £250 today not £20,000 in future!

Is it worth waiting to start buying shares until one has more money to invest? Our writer doesn't think so…

Read more »

Playful senior couple in aprons dancing and smiling while preparing healthy dinner at home
Investing Articles

I’ve bought Diageo shares to boost my long-term passive income!

I plan to hold on to my Diageo shares well into retirement. Here's why I think it's a top stock…

Read more »

New virtual money concept, Gold Bitcoins
Investing Articles

Down 61%, are Argo Blockchain shares worth buying?

Argo Blockchain shares have tumbled in value. As a shareholder, Christopher Ruane considers what might come next for the business…

Read more »

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

3 UK dividend stocks with yields over 10%

These dividend stocks are the highest yielders on the UK market, says Roland Head. But how safe are these generous…

Read more »

Couple relaxing on a beach in front of a sunset
Investing Articles

I’d start buying shares for passive income with this pair

Our writer is looking to earn passive income via investing, and here are two leading stocks he might buy.

Read more »