3 FTSE 100 shares I’d buy in a stock market crash in 2022

If rising interest rates bring about another stock market crash in 2022, I’ll be looking to buy these three FTSE 100 companies.

| 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.

Interest rates are rising. I don’t know whether or not this will result in a stock market crash, but in the event of a correction in 2022, here are three FTSE 100 companies that I’ll be looking at.

The first company is Experian (LSE: EXP). Experian provides credit information to lenders to help them make decisions about the creditworthiness of prospective borrowers. It operates in an industry with relatively little direct competition and produces strong returns on invested capital as a result. The company has a vast database of information, which is difficult to replicate, and this provides a barrier to entry for potential competitors.

Inflation Is Coming

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!

Click here to claim your copy now!

Experian currently has a market cap of just over £28bn. I think that’s a little on the expensive side for a company that also has over £3bn in debt and produced around £830m in free cash last year. I therefore won’t be buying it at current prices. But I do think that the strength of the underlying business might make Experian shares attractive in the event of a stock market crash brought on by rising interest rates.

I also think that there is a lot to like about Rio Tinto (LSE: RIO). As a mining company, Rio Tinto naturally tends to do better when prices for the commodities it produces are high, but its low cost of production means that the company can make money even when prices are lower. Most of the company’s revenue also comes from politically stable areas, such as Australia, North America, and Europe. This helps the overall quality of Rio Tinto’s earnings

The price of iron ore is substantially lower than it was last year. Since iron ore makes up around 70% of Rio Tinto’s revenue, I expect declining iron ore prices to weigh on the company’s earnings and I am expecting the dividend it returns to shareholders to be lower as a result. Right now, I am not convinced that the market is pricing this in yet. Nonetheless, in the event of a stock market crash, I would be tempted to pick up shares in a commodity producer with quality assets and a low cost of production.

The last company that would catch my attention in a stock market crash is Legal & General (LSE: LGEN). The company’s businesses include insurance, capital investment, investment management, and retirement. It uses its asset base to generate returns and growth has been steady, rather than spectacular, from around £492bn at the end of 2018 to just over £568bn at the midpoint of 2021.

Legal & General shares currently trade at 1.69 times their book value and the company generates a return on equity of 21%. I think that this implies an investment return of 12.5%, which I view as attractive even without explosive growth. The possibility of a stock market crash constitutes a risk for Legal & General’s investment businesses and if money leaves the markets, then the investment products it offers might suffer as a result. But I made an investment in Legal & General in 2020 and would anticipate making another one in the event of a stock market crash in 2022.

More on Investing Articles

Social media and digital online concept, woman using smartphone
Investing Articles

Will Lloyds shares recover in 2022?

Lloyds shares have struggled this year and the looming recession won't help. But I'd still buy them today.

Read more »

Two hands holding champagne glasses toasting each other with Paris in the background
Investing Articles

Can the stock market make me rich even now?

Here are three ways I'm coping with the stock market's recent bout of weakness and aiming to build wealth in…

Read more »

Cogs turning against each other
Investing Articles

3 top investment trusts to buy right now

Investment trusts offer a wide range of options for investors. And in troubled times, they provide some safety through diversification…

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

Why hasn’t the FTSE 100 crashed in 2022?

The catastrophic events of 2022 have left investors around the globe fearing the worst for stock markets. And some have…

Read more »

Trader on video call from his home office
Investing Articles

2 inflation-resistant FTSE 100 stocks to buy today

Soaring inflation could dent my returns if I don't take care. Here are two top inflation-resistant FTSE 100 stocks I'd…

Read more »

Tabletop model of a bear sat on desk in front of monitors showing stock charts
Investing Articles

Why a bear market is an investor’s best friend

A bear market can certainly be scary. But any investor tempted to sell might benefit by looking at Warren Buffett's…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

The Rolls-Royce share price could be stuck below £1 for a while. Should I buy?

The Rolls-Royce share price has been trading at penny stock levels since April. Could the stock be a bargain at…

Read more »

Young brown woman delighted with what she sees on her screen
Investing Articles

I’m aiming to make £45,000 in passive income with UK shares and never work again!

Investing regularly in UK shares can generate a substantial passive income over the long run. Zaven Boyrazian demonstrates how.

Read more »