3 FTSE 100 shares to buy before the market rebounds

This year, many FTSE 100 stocks have fallen 20% or more. Edward Sheldon highlights three shares he’d buy before global stock markets recover.

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The FTSE 100 has held up well in 2022, relative to other major stock market indexes. Year to date, it’s only down a few percent.

Yet this doesn’t tell the full story. That’s because this year the Footsie has been propped up by oil stocks such as Shell and BP. A closer look reveals that many stocks within the index are down 20%, or more.

I don’t know exactly when these beaten-up FTSE 100 stocks will recover. But history shows we are likely to see a rebound at some stage. With that in mind, here’s a look at three Footsie stocks I’d buy for my portfolio now, before the stock market recovers.

Smith & Nephew

One of my top picks in the FTSE 100 right now is Smith & Nephew (LSE: SN), the healthcare company that specialises in joint replacements.

There are several reasons I’m bullish here. One is that backlogs for joint replacement surgery remain high after Covid-19. This positions the company well for growth in the years ahead.

Another is that the world’s ageing population should support growth over the next decade. According to the World Health Organisation, by 2030, one in six people globally will be 60 or over. This should create high demand for joint replacements.

Key risks here include further lockdowns and supply chain issues. With the stock trading at 14 times next year’s earnings however, I think a lot of this is priced in.

Experian

I also like the look of credit data specialist Experian (LSE: EXPN) right now. To my mind, this is one the FTSE 100’s best ‘quality’ growth stocks.

In recent years, Experian has shifted from just selling data to selling data with decisioning tools. This has helped boost growth. Last year for example, revenue rose 17%. Looking ahead, analysts expect the company to keep growing at a healthy clip. This year and next, they expect top-line growth of around 8%.

One thing that stands out to me here is that the company is buying back its own shares. In May, it announced a new $175m buyback. This should help boost earnings per share over time.

Of course, if technology shares continue to fall, Experian could underperform. The stock currently trades at just 22 times this year’s earnings forecast however. And at that multiple, I see a margin of safety.

Rightmove

Finally, I’d also buy shares in Rightmove (LSE: RMV) today. It operates the UK’s largest property website.

Rightmove is another quality growth company. Not only is it the leader in its industry by a wide margin, thanks to its strong brand, but it’s also extremely profitable. Last year, for example, its return on capital was about 280%, which is phenomenal.

Additionally, the company has a great track record in terms of revenue and earnings growth and wealth generation for shareholders.

It’s worth pointing out that Rightmove’s CEO is set to leave the company next year, after five years at the helm. This adds uncertainty. Another risk to consider is economic conditions in the UK. A prolonged downturn could see estate agents go out of business. This could impact Rightmove’s revenues.

With the stock currently way off its 52-highs, I think the long-term risk/reward is favourable for me though. The stock’s P/E ratio of 24 seems quite reasonable, to my mind.

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.

Edward Sheldon has positions in Experian, Rightmove, and Smith & Nephew. The Motley Fool UK has recommended Experian, Rightmove, and Smith & Nephew. 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.

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