In terms of investing, it’s time for me to reframe, refocus and look for cheap FTSE 100 stocks to buy.
The war in Ukraine hit the markets like a hurtling tenpin ball and scattered stocks as if they were skittles. But, as terrible as it is in Eastern Europe, I reckon the situation will prove to be temporary. And at some point, the hostilities will likely end.
That means the markets and individual stocks will probably recover from their depressed state. And, over time, businesses will likely overcome any operational setbacks the war has caused them.
The FTSE 100 has good form
In past recoveries, one of the best areas in which to invest has been big-cap shares. So now could be a good time to go shopping for cheap FTSE 100 stocks to buy now.
But it’s worth reflecting on the situation in the markets at the beginning of 2022, immediately before the invasion of Ukraine. Doing so could help me refocus.
Back in January, the long-running ‘stealth’ correction of over-priced and mainly tech-related stocks in the US had begun to affect the main US stock indices. And in the UK, we’d been seeing a bear market for many expensive stocks and small-cap companies for several months.
Again, much of that weakness took place below the surface and we wouldn’t have realised it by watching the main FTSE 100 and FTSE 250 indices. They remained elevated.
At the beginning of the year, I thought many investors appeared to be rotating out of over-valued growth and ‘story’ stocks and into classic value situations. And because of that, the London stock market looked like it was taking centre stage and attracting international investors. Indeed, the UK market has almost always looked like better value when compared to rich ratings we often see in the American market.
And although the UK isn’t packed with headline-grabbing mega-cap tech companies, it does host many quality enterprises. Some are steady, defensive earnings compounders and some are in more cyclical sectors. But regardless of their industries, I reckon the UK is a hot destination for value-hunting investors.
3 stocks I’m targeting
Of course, the hostilities in Ukraine had the effect of throwing this nicely stacked card table in the air. But my feeling is the initial shock of the situation has been digested by the markets. And in terms of investing, it may be a good time to continue hunting for good value on the London stock market.
With my focus on the FTSE 100, I’m keen on plumbing and heating supplies distributor Ferguson. The company has a big cyclical element in its operations but its also been growing for years. And I consider it to be one of the more robust cyclical businesses around.
I’m also focusing on two companies in the fast-moving consumer goods sector. Unilever provides branded goods in the areas of beauty, personal care, home care, foods and refreshment. And Diageo has a cracking business providing branded alcoholic drinks.
All shares carry risks and there’s no guarantee of positive performance from these stocks now. Businesses can run into operational setbacks along the way, even without a war. Nevertheless, these shares tempt me now and I’d aim to hold them for the long term as operational progress hopefully unfolds in the years ahead.
